Late call buying in Canadian Natural
Mike Yamamoto | firstname.lastname@example.org
optionMONSTER's Heat Seeker system detected the purchase of 5,000 November 32 calls at the same second in the final 4 minutes of yesterday's session, led by a print of 4,838 that went for $1. Open interest in the strike was a mere 7 contracts before the trade appeared, clearly showing that it is a new position.
These long calls, which lock in the price where the stock can be bought, are looking for CNQ to climb above $33 in the next seven weeks. 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 the $32 strike price through mid-November. (See our Education section)
CNQ rose 0.74 percent yesterday to close at $31.43. The Calgary-based oil and gas producer has been trapped in a tight range between $31 and $32 all month, holding above support at its 50-day moving average.
Yesterday's call buying pushed CNQ's total option volume to 5 times its daily average for the last month, with overall calls eclipsing puts by more than 9 to 1. The last-minute bullish activity coincided with late-day call buying in another Calgary energy company, pipeline operator Transcanada.