Options Trading News

January 18, 2013  Fri 12:21 PM CT

Energy has been gaining strength in the last month, and investors are placing some long-term bets in domestic gas producers.

optionMONSTER's Heat Seeker tracking program detected unusual activity in the January 2014 calls on companies such as Ultra Petroleum and Southwestern Energy. It began in SWN, with 3,600 of the 40 calls purchased for $1.93. Volume was almost 5 times open interest at the strike.

Minutes later, an even 4,700 UPL calls were bought at the 23 strike for $1.38. Volume was almost twice open interest in those. Both trades lock in long-term entry prices, letting investors benefit from rallies at a fraction of the cost. That reflects a sense of hopeful optimism toward the companies in the next 12 months.

SWN is up 0.18 percent to $33.63 in afternoon trading, while UPL declined 0.05 percent to $18.35.

Other natural-gas companies have been active recently, including Williams and Spectra Energy.

Separately, an investor bought 2,394 January 29 calls in Newfield Exploration and sold an equal number of February 30 calls for a net credit of $0.28. He or she probably owns shares in energy stock and is selling the options as part of a bullish covered call strategy. (See our Education section)
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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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