Options Trading News

December 4, 2013  Wed 4:45 AM CT

Goodrich Petroleum has fallen sharply from four-year highs in the last two months, but traders are looking for shares to bounce.

optionMONSTER's Heat Seeker system found heavy buying in the January 20 calls, where about 6,900 contracts traded for $1.15 to $1.80 yesterday. The volume was well above the strike's previous open interest of 1,551 contracts, indicating that new positions were established.

These long calls lock in the price where traders can buy the stock through mid-January no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, but the contracts will expire worthless if shares remain below $20. (See our Education section)

GDP rose 3.58 percent yesterday to close at $19.36. The oil and natural-gas company broke out of a multi-month range in late July and ran up to $28.55 in October--its highest price since late 2009--but has been declining steadily since.

Total option volume in the name topped 15,600 yesterday, 8 times its daily average for the last month. Only 719 of those contracts are puts, a reflection of the session's bullish sentiment.
Share this article with your friends


Premium Services

Education & Strategy

The art of trading

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.

View more education articles »