OptionsHouse

Options Trading News

December 20, 2012  Thu 3:47 AM CT

CVE: SEE CHART GET CHAIN FIND STRATEGIES
Cenovus Energy does not usually see much option activity, but yesterday traders were snapping up calls in the integrated oil company.

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.
Share this article with your friends


OptionsHouse

Premium Services

Upcoming Webinar:

Using Options For Income

http://bit.ly/1nY1OKA

Jon Najarian and Adam Mesh of Options Wealth Machine discuss a detailed strategy utilizing credit spreads to generate income, and how any level of trader can use this simple trading technique.

Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

View more education articles »