XL Capital Draws Long-Term Bettors

Option traders made long-term bullish plays on XL Capital (XL) today at the same time the insurance company saw a wave of stock buying.

optionMONSTER's Heat Seeker tracking program detected the purchase of more than 12,000 January 2011 17.50 calls for $3.50 to $3.80. Volume was five times existing open interest in the strike.

XL fell 0.74 percent to $17.47 in afternoon trading and has more than quadrupled so far this year. The call activity came during and shortly after a spate of stock purchases pushed the shares to their highs for the session.

The stock has been consolidating around $17 since late August. The level may have significance to chart watchers because it represents the area where the stock traded before collapsing amid last year's financial panic.

The stock needs to climb about 21 percent by the January 2011 for today's calls to generate a profit. Overall options volume in XL is three times greater than average today, with calls outnumbering puts by 6 to 1.

(Chart courtesy of tradeMONSTER)