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February 1, 2013  Fri 5:15 AM CT

PSX: SEE CHART GET CHAIN FIND STRATEGIES
Traders have been extremely active in Phillips 66 for months, and the bulls were back yesterday.

optionMONSTER's Heat Seeker system detected heavy buying in the March 65 calls, with some 5,500 contracts trading against open interest of just 612 contracts. The first blocks priced for $0.90, but premiums then climbed to $1 as the activity heated up.

Those long calls have locked in a $65 entry price on the red-hot oil refiner for the next 1-1/2 months, no matter how high the stock goes. The trader stands to generate some nice leverage in the event of a continued rally, but the contracts can also become worthless if it doesn't move. (See our Education section)

PSX fell 0.31 percent to $60.57 yesterday but is up 85 percent since getting spun off from ConocoPhillips last May. It's been climbing along with other refiners as an improving economy draws investors to the energy sector. Profit also beat expectations when the company reported earnings on Wednesday.

Total option volume was slightly above average in the name yesterday, with calls outnumbering puts by a bullish 4-to-1 ratio.

(A version of this post appeared on InsideOptions Pro yesterday.)
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So far, my articles have taken you through a logical progression of option theory and fundamental concepts of options. As of yet, I have not mentioned a single strategy and for a good reason! The actual application of a strategy should come AFTER you learn about the option product itself.

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