Options Trading News

November 27, 2012  Tue 9:43 AM CT

Anadarko Petroleum has been climbing, and one big investor is positioning for a gusher.

optionMONSTER's Heat Seeker tracking program detected the purchase of 25,870 February 80 calls for $2.42. Seconds later, 20,696 February 75 calls were sold for $4.25 against previous open interest.

This suggests that the trader bought the February 75s at a previous date, made money on those calls, and then rolled the position to the February 80 strike. The trader collected $2.5 million in the process, which may have been the initial investment.

The number of contracts owned was also increased, which will provide enhanced leverage in the event of a big rally. (See our Education section for more on how option strategies can be tailored to specific market expectations.)

APC is up 0.67 percent to $72.77 this morning and 11 percent in the last month. The oil and natural-gas company is now back near the top of its recent trading range, which could be leading some chart watchers to believe that the stock is at risk of a pullback. Today's call roll matches that belief because the investor recovered some of his or her capital while remaining positioned for a potential breakout.

Total option volume is quadruple the daily average so far in the session, according to the Heat Seeker. Calls outnumbered puts by more than 100 to 1.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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