Options Trading News

December 28, 2012  Fri 4:45 AM CT

Valero is not far from its highs of the year, and one trader is looking for more gains in the oil-refining company.

optionMONSTER's Heat Seeker tracking system detected the purchase of 3,000 January 36 calls in a single print for $0.31 yesterday. This is a new position, as the volume was above the strike's open interest of 2,564 contracts before the session began.

VLO rose 0.45 percent yesterday to close at $33.83. Shares had gone on a scorching run from $20 to its 52-week high of $34.49 from early June to mid-September, then pulled back to support at $28 before resuming its climb.

Yesterday's long calls, which lock in the price where traders can buy the stock, are looking for VLO to rise roughly 9 percent in the next three weeks. If the shares are below the $36 strike price at that time, the calls will expire worthless. (See our Education section)

Overall calls in the name outnumbered puts by nearly 4 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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