Trader looking for pop in Phillips 66
David Russell | [email protected]
optionMONSTER's Heat Seeker monitoring program detected the purchase of 10,000 May 67.50 calls for $0.25 and the sale of an equal number of May 70 calls for $0.05. That translates into a cost of just $0.20.
If PSX closes at $70 on expiration, that investment will inflate to $2.50 in value--a profit of 1,150 percent from the shares moving less than 20 percent. Their 52-week high is $70.52, so a rebound to that peak is expected. (See our Education section for more on the strategy, known as a bullish call spread.)
Volume was below open interest in the 70s, so it is also possible that the investor closed an existing position at the higher strike and rolled it down to the 67.50s. That would also be bullish, as it reflects a belief that the stock will bounce.
PSX is down 1.91 percent to $60.62 in afternoon trading. The energy stock more than doubled between June and late March but has been pulling back since. Earnings have beaten expectations for at least four straight quarters.
Total option volume is quadruple the daily average, with calls outnumbering puts by 8 to 1.