Baker Hughes ripped higher at the end of last week, and the
bulls are sticking around for more.
, our Heat Seeker monitoring system detected buying in the October
52.50 calls for $0.27. A strong earnings report Friday morning
drove BHI higher by 7.28 percent to $55.55, and those calls shot up
more than tenfold.
The investor sold 16,000 contracts at an average price for $3.25
and bought an equal number of November 60 calls for $0.82. The
trader collected a credit of $2.43 in the process--800 percent more
than his or her initial investment--and now stands to gain even
more if the stock climbs further by early next year.
The company's profits totaled $0.81 a share on revenue of $5.79
billion, while analysts had expected only $0.73 and $5.77 billion
respectively. It is the latest name in the energy sector to report
strong results as oil and gas production surges globally. BHI is
now back to levels last seen in late 2011.
lock in the price where a stock can be purchased, letting investors
cheaply position for a rally. In the case of Friday's transaction,
the trader needed to roll the position because the October
contracts were expiring in the money at the end of the session.
Total option volume in BHI was 8 times greater than average in the
session, according to Heat Seeker. Overall calls outnumbered puts
by 18 to 1.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.
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