Options Trading News

January 23, 2013  Wed 12:23 PM CT

The bulls have cleaned up in Questar, but they're not exiting the trade yet.

Early this year, optionMONSTER's Heat Seeker monitoring system detected buying in the April 22 calls for $0.25. The shares began climbing within a few days and those calls quickly appreciated in value--doubling, tripling, and quadrupling as the stock pushed higher.

Volume is spiking again today, this time as traders roll the winning position forward in time. They sold 8,550 April 22 calls for an average premium of $1.075 and purchased and equal number of April 23s for $0.55. That allowed them to recover $0.525, more than twice their initial investment, while remaining exposed to further upside in the natural-gas company.

STR is up 1.61 percent to $22.73 in afternoon trading. That's a gain of less than 10 percent since the initial call buying, which shows the kind of leverage that can be achieved with options. (See our Education section)

Several natural-gas companies have been active recently as well. Williams has been the target of repeated upside positioning, while Kinder Morgan also handed out gains of more than 50 percent over the space of two sessions.

Total option volume in STR is 14 times greater than average so far today, with not a single put trading so far.
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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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