Options Trading News

May 10, 2013  Fri 12:21 PM CT

Option traders appear to be taking some quick profits in Noble.

optionMONSTER's Heat Seeker detected the purchase of about 10,000 May 41 calls for $0.25 to $0.32 yesterday. Most of those contracts have since doubled in value, trading as high as $0.62, and many of those buyers are apparently closing those positions at a profit as more than 7,800 of the calls changed hands today in volume below open interest.

NE is down 0.87 percent to $39.80 in afternoon trading. The oil and natural-gas drilling company has been range-bound for years but has risen sharply since beginning this month at the $37 level. Traders have been buying calls at various strikes in the last week, looking for the stock to break out as sentiment toward the energy sector gathers positive momentum.

The difference in percentage gains between the stock and those May 41 calls shows how options can provide major leverage. NE shares are up less than 1 percent since opening yesterday at $39.42, but most of those long calls are up more than 100 percent. (See our Education section)

Total option volume in the name today exceeds 15,500 contracts nearly double its daily average for the last month.
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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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