Options Trading News

July 2, 2013  Tue 12:20 PM CT

Traders are rolling with Patterson UTI Energy as the energy driller tries to keep its uptrend intact.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 2,500 July 21 calls for $0.375 and the sale of 1,500 July 20 calls for $0.875. Volume was below open interest at the lower strike, so it appears an existing position was closed and rolled higher.

The investor collected $37,500 making the adjustment, but maintained a net delta of about 1,000 because they increased the number of number of contracts owned. As a result, they will have a similar performance to the upside with less capital at risk. (See our Education Section for more on how to manage trades more effectively with options.)

PTEN is up 1.88 percent to $20.55 in afternoon trading. The stock climbed as high as $25.48 in March and is now attempting to rebound after retreating to its 200-day moving average.

Earnings have beaten expectations for at least the last year. The next quarterly report is scheduled for July 25--after today's calls expire--so the buyers are looking for shares to melt up into the announcement.

Total option volume is 7 times greater than average in the name, with calls outnumbering puts by 62 to 1.
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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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