Options Trading News

June 20, 2013  Thu 5:16 AM CT

For the second session in a row, the bulls targeted Southwestern Energy yesterday.

optionMONSTER's Heat Seeker tracking program detected the purchase of more than 8,000 September 43 calls for $0.87 to $0.90. Volume was more than twice previous open interest of 3,378 from Tuesday's buying, which means that traders put even more money to work on the long side.

These long calls lock in the price where shares of the natural-gas producer can be bought. Investors use the contracts to prevent stocks from running away from them at a fraction of the cost of buying the shares outright. Their relatively cheap price can also result in significant leverage on a percentage basis. (See our Education section)

SWN fell 1.21 percent to $37.57 yesterday but is up 37 percent in the last year. The stock found support at its 200-day moving average early in January and February but has bounced at its 100-day more recently. That suggests a potential acceleration of its bullish uptrend.

Total option volume was 6 times greater than average in the session, with calls outnumbering puts by 23 to 1.

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