If you’re looking for a low cost option play with a big upside potential, check out the following article. Manulife Financial has taken a big hit lately and investors expect it to rebound within the next few months. This may be the perfect time to jump in. Just make sure you do your own research before jumping on it. You may not agree at all after you do.
Manulife Financial is not a name seen often, but it lit up OptionMonster’s screening systems on Friday.
Almost 2,000 March 12 calls were purchased on the beaten-down life insurer, which is attempting to bounce at its lowest price since March 2009. Investors paid $0.25 and $0.30, and volume was quadruple the open interest in the strike.
Manulife fell 0.38 percent to $10.40 on Friday and has lost more than one-third of its value in the last six months. The declines have been slowing since the summer, however, and valuations could attract some investors: It trades at less than book value and has a 5 percent dividend yield.
Those long calls lock in an entry price on the stock, so they could double or triple if Manulife rallies to $12 by in the next few months. But they will also expire worthless if the stock fails to move.
Given the apparent cheapness of the stock, and how long they have for the calls to pay off, Friday’s trades seem to be an inexpensive bet that Manulife will rebound in coming months.
Overall option volume was seven times greater than average, with calls accounting for more than two-thirds of the activity.
By: David Russell – Writer, OptionMonster — Russell has no positions in MFC.
See CNBC for the rest of the story on Manulife
