Options Trading News

August 29, 2013  Thu 4:45 AM CT

Energy names have seen steady option activity in recent weeks, and yesterday the bulls turned their attention to French oil-and-gas producer Total.

optionMONSTER's Heat Seeker system detected heavy call buying in the November 60 strike, where 3,126 contracts traded for $0.50 to $0.70. The voume was well above the previous open interest of 646 calls, indicating that new positions were established.

These long calls lock in the price where traders can buy the stock through mid-November no matter how far it might rise. They could be sold earlier if premiums climb with a rally before then, but the contracts could also expire worthless if shares remain below $60. (See our Education section)

TOT rose 2.25 percent yesterday to close at $56.91. Shares seemed to stall after running higher ahead of the Paris-based company's earnings report on July 26, but they resumed their upward trend in the last two weeks despite the broader market's recent downturn.

Overall option volume in the name topped 6,300 contracts, 5 times its daily average for the last month. Calls outnumbered puts by almost 4 to 1, a reflection of the session's bullish sentiment.
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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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