Options Trading News

Traders are looking for Hess to rally, and they are giving it more time to run.

Our Heat Seeker system detected the purchase of 7,300 October 57.50 calls for $0.87 against open interest of just 539 contracts. At the same second, 5,600 September 52.50 calls were sold for $2.01 with open interest over 19,000, so it seems that the trader was rolling a bullish position to a higher strike one month forward.

Because these calls lock in the purchase price of the stock, they can generate some nice leverage if Hess moves in the right direction. The drawback is that their premiums can drop in a hurry before expiration, so those September contracts were in the danger zone with time running out on Friday of next week. (See our Education section)

So the trader closed out them out yesterday and rolled some of the money to the October strike, which is $5 higher. He or she got back most of the capital from the original trade and still stands to make some money if the shares move higher.

HES rose 0.43 percent to $53.13 yesterday. The company, which operates in exploration and production, has been rising along with other energy names.

More than 49,000 options traded in total. Calls outnumbered puts by 41,000 to 8,200, a reflection of the session's bullish sentiment.

(A version of this post appeared on InsideOptions Pro yesterday.)