Bullish bet boosts Nexen (NYSE:NXY) options volume


Without any notable news on Nexen Inc. (NYSE: NXY ) on Monday, shares of the company are rallying and outperforming the broader market strength during afternoon trading. Options volume in the December expiration month was active on Monday thanks to at least one bullish investor.

NXY shares gained 37 cents, or nearly 2%, to $21.17 as of 3 p.m. EDT. The company did not announce any news today, and it's been weeks since its better-than-expected earnings announcement. The market does not expect the company's next earnings release until late-October.

Just before noon EDT, an investor bought 3,000 December 22.5 calls for $1.05 per contract, bought 7,500 December 25 calls for 42 cents per contract, and sold 12,600 December 17 puts for 50 cents per contract. Current open interest in the puts is 544 contracts while the lower-strike calls is 216 contracts and the higher-strike calls are home to current open interest of 278 contracts. The investor opened this premium-neutral trade to bet on upside throughout the next few months.

The investor collected a total of $630,000 for the puts and paid the same amount of money for the calls. A look at the graph below shows the investor will turn profits at December options expiration if NXY shares are trading higher than $22.50 at expiration. This position could theoretically turn unlimited profits if the stock is trading higher than this level at expiration.

The investor does not collect any returns, but also does not lose any, if the stock is trading between the put strike and the lower call strike. Once the stock drops below $17.50, however, the investor will lose money as the stock continues to drop toward zero.

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.

This article appears in: Investing , Options

Referenced Stocks: NXY

Jud Pyle

Jud Pyle

More from Jud Pyle:

Related Videos



Most Active by Volume

  • $17.62 ▲ 0.51%
  • $25.62 ▲ 1.91%
  • $111.78 ▼ 0.77%
  • $36.37 ▼ 1.76%
  • $47.66 ▲ 0.29%
  • $2.59 ▼ 0.38%
  • $7.34 ▲ 2.37%
  • $8.14 ▲ 6.96%
As of 12/19/2014, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by BankRate.com