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May 22, 2013  Wed 4:47 AM CT

WMB: SEE CHART GET CHAIN FIND STRATEGIES
Energy pipelines have been hot, and yesterday a massive trade occurred in Williams.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 105,000 January 50 calls for $0.17 and the sale of a matching number of January 45 calls for $0.71. Volume was below open interest in the 45s, indicating that an existing position was closed and rolled to the higher strike.

Given their cheap price, long-dated calls can generate significant leverage from a rally even if they remain out of the money. The strategy provides upside exposure at a much lower cost than owning the shares outright. (See our Education section)

WMB fell 0.34 percent to $37.75 yesterday but is up 16 percent so far this year. It's been trending steadily higher as investors focus on the resurgence of domestic gas production in the United States.

The call roll was one of the largest trades of the session and made WMB the second-busiest company in the entire option market. It's normally not even in the top 30, according to the Heat Seeker. Calls outnumbered puts by more than 135 to 1.

There was also a call roll yesterday in MarkWest Energy, another pipeline that's broken out to record levels. The investor has already made at least $4 million on the trade and is looking for the shares to keep running through August.

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Education & Strategy

The Strike-Based Greeks

The other Greeks (Gamma, Vega, and Theta) are calculated by using month and strike data, and not by individual option. These are called strike-based Greeks. Gamma, Theta, and Vega are all strike-based Greeks

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