Daimler AG (DAI) Drives Curious Call Volume

In last week's edition of Trading Tools, defense issue Raytheon Company (RTN - Analyst Report) was examined, as it appeared on the Zacks Unusually High Option Volume stock screener. Utilizing the same filter today, a different equity piqued my interest: German car king Daimler AG (DAI ).

According to Zacks, Daimler was the focus of an outpouring of optimism in the options pits on Wednesday. The security saw roughly 62,500 calls cross the tape – 18.5 times its average single-day volume of fewer than 3,400 bullish bets.

However, calls aren't really near-term options traders' cup of tea; the equity's Schaeffer's put/call open interest ratio (SOIR) currently stands at 1.51, indicating that puts outnumber their bullish rivals among options slated to expire within 3 months. Furthermore, compared to similar readings taken during the past year, Daimler's SOIR ranks in the 94th percentile. In other words, short-term options speculators have actually been more skeptically skewed toward DAI only 6% of the time during the past 12 months.

So, why are options players suddenly revving their engines toward the bullpen?

One potential catalyst could've been an optimistic analyst note. A major brokerage upgraded Daimler to "buy" from "neutral" last week, predicting the shares could catch up with their sector peers soon, as "bad" news has already been discounted and market expectations remain low. As a result, shares of DAI skyrocketed 7.5% higher Wednesday, making them the sharpest gainers among German large-cap stocks.

Technically speaking, the past couple of years have been a bumpy ride for the auto industry, with DAI being no exception. The stock has surrendered about 70% since flirting with the 110 level in late 2007, but eventually found a foothold in the 25 neighborhood, which has acted as support since October 2008. On the bright side, the equity recently jumped a potentially significant technical hurdle, closing last week atop its 10-week and 20-week moving averages for the first time since November 2007. However, shares of DAI could face an additional layer of resistance in the 35-to-40 neighborhood, which hasn't been breached on a weekly closing basis in more than 6 months.

The stock currently harbors only 1 "buy" or better rating, Zacks reports, compared to 5 "hold" or worse ratings.

Nevertheless, this widespread bearish bias among the brokerage bunch could actually be a boon to the stock going forward. Should German car sales extend their recent run higher – the country's auto purchases were bolstered 40% on the year in March – or should the shares of DAI power past resistance, skeptics on the Street could get spooked. An unwinding of pessimism in the options pits, or a fresh wave of upgrades and/or price-target boosts, could place additional buying pressure on the motorcar mogul.

Read the full analyst report on DDAIF

Read the full analyst report on RTN