Learn the trade here. Make it on tradeMONSTER

Options Trading News

November 21, 2013  Thu 12:01 PM CT

SLB: SEE CHART GET CHAIN FIND STRATEGIES
Energy is coming back to life, and the paper is flowing in Schlumberger.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 5,000 January 92.50 calls for $2.08 and the sale of an equal number of January 97.50 calls for $0.65. Volume was below open interest at the lower strike so there are two possible explanations of the activity.

One is that the investor owns shares and had sold the 92.50s as part of a covered-call strategy. He or she may have then adjusted the position higher, raising the eventual exit price by $5.

Alternatively, both halves of the trade may have been opened. In that case it was a bullish call spread with the potential to earn 250 percent if the stock reaches $97.50 or higher by expiration. Either way, they paid $1.43 and are looking for higher prices. (See our Education section)

SLB is up 0.29 percent to $90.71 in afternoon trading and has risen 29 percent in the last year. The Franco-American oil-servicing company has pulled back to its 50-day moving average and is pausing near its previous long-term highs from 2011. Today's trader is looking for a breakout levels last seen before the market crashed in 2008.

Other energy-related names have also been active recently, including Newfield Exploration and W&T Offshore.

Total option volume is twice the daily average so far in the session, according to the Heat Seeker. Calls outnumber puts by more than 5 to 1.
Share this article with your friends


Related Stories

SLB

Long-term bull likes Schlumberger

July 18, 2014

The oilfield-services company is climbing off morning lows following its earnings report, and a large call spread is bullish in the long term.

Premium Services

Free Webinars

Education & Strategy

Why traders hedge with sector ETFs

Many people who are not familiar with options think that they increase risk, but their first and primary purpose is...

View more education articles »
optionMONSTER stockMONSTER tradeMONSTER