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October 2, 2013  Wed 4:14 AM CT

WLL: SEE CHART GET CHAIN FIND STRATEGIES
One investor is betting that Whiting Petroleum will continue ripping higher.  

optionMONSTER's Heat Seeker system detected the sale of 1,000 October 57.50 calls for $4.77 and the purchase of 1,500 October 62.50 calls for $1.48, above the ask price at the time. Volume was below open interest in the 57.50s but above it in the 62.50s, indicating that a position is being rolled higher.

The trader is apparently closing the lower-strike calls and opening new ones $5 higher, likely taking some profits off the table and applying some of the proceeds to buy the 62.50 calls in a larger position. The new long calls lock in the price where the stock can be purchased for the next three weeks but will expire worthless if shares remain below $62.50. (See our Education section)

WLL rose 3.21 percent yesterday to close at $61.77. The oil and gas company is up some 18 percent in just the last month, rising sharply along with many other energy names.

Total option volume in the name was just shy of 8,500 contracts yesterday, more than double its daily average for the last month. Overall calls outpaced puts by nearly 7 to 1.
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Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

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