OptionsHouse

Options Trading News

December 17, 2012  Mon 12:21 PM CT

VLO: SEE CHART GET CHAIN FIND STRATEGIES
Oil refiners have been incredibly bullish, and one investor apparently thinks that Valero Energy isn't done running yet.

optionMONSTER's tracking programs detected the purchase of about 5,500 June 32 calls for $4.06 and the sale of an equal number of June 33 calls for $3.46. Volume was below open interest at the lower strike, so there are two possible explanations of the trade.

One is that the investor owns VLO shares and had sold the 32s as part of a covered call strategy. He or she then bought them back and rolled the position to the higher strike. While it cost them $0.60, they now have the right to sell their stock for $1 more.

The other possibility is that the trader opened a new vertical call spread, though that is less likely because both strikes are in the money. (See our Education section)

VLO is at $33.84 this afternoon, up 1.41 percent on the day and 17 percent since the beginning of last month. Our tracking programs also showed unusual activity in the March 36 calls last week, which have appreciated more than 25 percent since the post.

Total option volume in VLO is twice the daily average so far today, with calls outnumbering puts by more than 4 to 1.
Share this article with your friends


Related Stories

VLO

Valero trades are betting slide is ending

June 29, 2016

The oil refiner is down 22 percent in the last three months, but July put sellers are betting that further declines will be limited in coming weeks.

VLO

What's behind downside play in Valero

June 14, 2016

The oil refiner is down 18 percent in the last three months, and a large trader apparently believes that it may have more room to fall.

VLO

Why traders are buying puts in Valero

June 6, 2016

The oil refiner is down 13 percent in the last three months, and traders apparently believe that it may be headed for another drop.

OptionsHouse

Premium Services

Education & Strategy

Know the risks behind covered calls

Selling calls is a popular strategy for both retail and institutional traders, but they typically do it in very different fashions.

View more education articles »