OptionsHouse

Options Trading News

May 21, 2013  Tue 5:16 AM CT

APA: SEE CHART GET CHAIN FIND STRATEGIES
Energy producer Apache bounced at its 200-day moving average, and the bulls are looking for steady gains.

optionMONSTER's tracking programs detected the purchase of 10,000 January 90 calls for $3.51 and the sale of an equal number of January 100 calls for $1.36. Volume was more than quadruple open interest at each strike, indicating new activity.

Owning calls locks in the price where investors can buy shares, while selling them fixes a maximum exit level. Combining the two strategies lets them control the spread between two prices at low cost.

For instance, yesterday's Apache trader paid just $2.15 to open the position and will collect $10 if the stock closes at or above $100 on expiration. That's a profit of 365 percent in the options from a move of less than 20 percent in the share price. (See our Education section for more on how options can be used to generate leverage.)

APA rose 3.42 percent to $84.08 yesterday and is up 24 percent since hitting a four-year low last month. The natural-gas and oil producer is one of several energy companies that have rallied in recent weeks as investors turn bullish on the global economy.

Total option volume was 5 times greater than average in Apache yesterday. Calls accounted for a bullish four-fifths of the total.

(A version of this post appeared on InsideOptions Pro yesterday.)


Share this article with your friends


Related Stories

APA

Has Apache finally bottomed?

August 11, 2015

Traders are willing buyers with the oil-and-gas stock clawing back from its lowest level in more than a decade.

OptionsHouse

Premium Services

Archived Webinar

Education & Strategy

Options Academy: On Options Strategies in General

Before we hop into the different option strategies, I have a few thoughts for you to remember concerning the strategies and our use of them.

View more education articles »