OptionsHouse

Options Trading News

April 25, 2013  Thu 12:20 PM CT

TLM: SEE CHART GET CHAIN FIND STRATEGIES
One big investor apparently thinks that Talisman Energy is finally ready to turn around.

optionMONSTER's Heat Seeker monitoring system detected the purchase of some 20,000 October 13 calls for $0.615 and the sale of a matching number of October 10 puts for $0.475. Volume surpassed open interest at each strike, indicating that new positions were initiated.

The position cost $0.14 to open and is similar to owning shares in the Canadian oil driller. The calls will appreciate and the puts will lose value if TLM pushes higher, while the opposite will happen to the downside. Investors use the combination strategy because it allows them to control the equivalent of 2 million shares at a fraction of the cost. It essentially prevents them from missing a strong rally while also programming a buy order at the same $10 level where the stock bounced last year. (See our Education section for more on how options can be used to manage trades.)

TLM is up 1.64 percent to $11.81 in afternoon trading and has been moving sideways for more than a year. Energy stocks have mostly lagged in the last quarter but have been the strongest sector in the last week as investors bet on stronger economic growth in the second half.

Total option volume is more than 11 times greater than average in TLM so far today. First-quarter earnings come out on May 1.
Share this article with your friends


Invest Like a Monster - San Diego: June 26-27

TRADING WEEKLY OPTIONS

The fastest money in the market
View full report »

Premium Services

Archived Webinar

Education & Strategy

Long synthetic call

Long and short Synthetic stock are two of the six basic synthetic positions that exist. Number three on our list is the Synthetic Long Call...

View more education articles »