Bulls Stampede into Focus Media

By David Russell

Stock and options trading turned bullish on Focus Media Holding (FMCN) Monday as investors bet that the Chinese company will rally by this fall.

optionMONSTER's Heat Seeker tracking program detected heavy buying of the October 12.50 calls, which traded 16,660 times for $0.10 to $0.60. Volume in the strike was more than 14 times open interest.

FMCN, which sells advertising on video screens and digital billboards, rose 12 percent to $10.87 Monday. The stock is up 19 percent in the last month, compared with a 3.33 percent gain for the iShares FTSE/Xinhua China 25 Index (FXI), an exchange-traded fund that tracks the broader Chinese market. FMCN is still 58 percent below where it traded a year ago.

The reason for the options action isn't clear. One unsubstantiated report said the company will release earnings soon. FMCN last reported earnings on June 19. The company is also selling part of itself to Sina under an unusual share-distribution plan.

FMCN needs to climb about 19 percent by expiration for the October 12.50 calls to turn a profit. Investors also snapped up the September 12.50 calls, betting on a move over the rest of the week. The options traded 5,525 times for $0.05 to $0.15 against open interest of 906 contracts.

The October 10 calls and September 10 calls also attracted inflows, although volume was below open interest in both strikes. Overall options volume in FMCN was 30 times average, with calls outnumbering puts by more than 4 to 1.

(Chart courtesy of tradeMONSTER)