Options Trading News

September 25, 2012  Tue 3:16 AM CT

Quicksilver Resources rose with bullish option activity yesterday after announcing a joint energy-drilling project with Royal Dutch Shell.

optionMONSTER's systems detected the purchase of 1,884 October 5 calls, mostly for $0.10. That was more than 10 times the open interest in the strike at the beginning of the day, so this is fresh buying.

KWK rose 2.43 percent to close at $4.21 yesterday. Shares of the oil and natural-gas company have been rising since starting the month at a low of $3.32 but are still trading at less than half of their 52-week high of $8.94.

If the calls purchased yesterday are held until expiration in mid-October, the stock would need to gain more than 21 percent for them to be profitable. The option premiums could also rise before then, allowing traders to sell the calls with a profit earlier. (See our Education section)

Yesterday's trading pushed overall volume in the name to 3.5 times its daily average. Calls outnumbered puts by nearly 5 to 1, a reflection of the session's bullish sentiment.
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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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