Call buyers targeting Cenovus Energy
Mike Yamamoto | [email protected]
optionMONSTER's Heat Seeker system detected the purchase of 1,303 January 35 calls for $0.40 to $0.50. The volume was 6 times the strike's open interest of 216 contracts at the beginning of the day, so this is fresh buying.
The long calls, which lock in the price where traders can buy the stock, are betting that CVE will gain at least 5 percent by expiration on Jan. 18. The traders can sell those options at a profit earlier if premiums rise before then with any rally, but the calls will expire worthless if the stock doesn't rise. (See our Education section)
CVE rose 0.87 percent yesterday to close at $33.75, right at its 50- and 100-day moving averages. Shares have been trapped mostly between $32 and $36 since early August.
Total option volume in the name was just 1,397 contracts yesterday, but that is 13 times its daily average of just 109 in the last month. Only 31 calls traded in the entire session, an indication of the bullish sentiment.