Mailing and logistics firm Pitney Bowes (PBI) is up 93% over the past year, more than double the returns of the S&P 500. One trader sees more upside ahead over the coming weeks.
That’s based on the December 13 $9 calls. With 30 days until expiration, 27,755 contracts traded compared to a prior open interest of 120, for a 231-fold rise in volume on the trade. The buyer of the calls paid $0.19 to make the bullish bet.
Pitney Bowes shares recently traded for just under $8, meaning shares would need to rally by $1, or just over 12%, for the option to move in-the-money. The strike price is right above the stock’s 52-week high of $8.80, set just last week.
Following its massive rally, shares still look like a value play, trading at 0.4 times its price-to-sales ratio, and at less than 8 times forward earnings.
Action to take: Pitney Bowes shares are in a strong uptrend, and momentum investors may like the stock here. Shares can likely also continue to rally given their relative value, and on an improving outlook for the economy and shipping needs.
Plus, at current prices, Pitney Bowes pays a 2.6% dividend.
For traders, the December 13 $9 calls are aggressive, but also inexpensive enough to potentially see mid-to-high double-digit returns in the span of a few trading days.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.
