The bulls think that Phillips 66 may return to its winning ways.
The oil refiner was an almost-constant presence on our Heat Seeker
monitoring system last year and early this year, throwing off a
string of hugely profitably trades. But it's been flagging since
early April along with other companies in the industry such as
Valero Energy and Tesoro.
Today the option paper is looking to the upside once again. Some
5,200 November 67.50 calls were purchased for $2.10 as an equal
number of November 80 calls were sold for $0.40. That translates
into a debit of $1.70.
Volume was below open interest in the November 80s, so there are
two possible explanations of the activity. One is that both halves
of the trade were opened as new positions, in which case it this a
bullish call spread
with a maximum profit of 635 percent on a move to $80 by
Alternatively, the trader may have owned the November 80s and is
rolling them to a lower strike now that the stock is down. If
that's the case, he or she is adding money to a losing trade in
hopes that shares
. (See our
PSX is trading at $58.15 this afternoon, off 3.71 percent on the
day and down 13 percent since the start of the month. It had
doubled between June and April.
About half an hour after the activity in the November contracts, a
similar transaction appeared in the August expiration. This time,
5,000 August 62.50 calls were bought for $1.70 and 5,000 August
67.50s were sold for $0.60. Volume was also below open interest at
the higher strike.
Total option volume was almost 7 times greater than average so far
today, according to Heat Seeker. Calls outnumber puts by a bullish
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