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August 20, 2013  Tue 5:16 AM CT

Spectra Energy has been a favorite target for bulls in recent months, and yesterday they returned.

optionMONSTER's Heat Seeker system found heavy buying in the December 35 calls, which saw more than 11,700 contracts trade yesterday. The action was led by blocks of 4,909 and 2,853 that went for $0.85 in volume well above the strike's previous open interest of just 499 contracts, clearly showing that these are new positions.

These long calls lock in the price where traders can buy the stock through mid-December regardless of how far it might rise. The options could be sold earlier at a profit if premiums rise with a rally before then, but the contracts could expire worthless if shares remain below the $35 strike price. (See our Education section)

SE slipped 0.15 percent to $33.49 yesterday. The natural-gas company has been falling from the $36 level since reporting second-quarter results on Aug. 6, breaking below its 50-day moving average last week.

The energy name saw bullish option activityin May and June. Total option volume in Spectra surpassed 15,000 contracts yesterday, quadruple its daily average for the last month, and calls outnumbered puts by a bullish 32-to-1 ratio.

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

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