Bulls clean up fast in Murphy Oil

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Murphy Oil bounced at the end of last week, and option traders cleaned up in a hurry.

optionMONSTER's Heat Seeker tracking program detected unusual activity in the Arkansas-based energy company a little more than an hour into Friday's session. Large blocks traded first in the February 62.50 calls for $0.15 and then in the March 62.50s for $0.25.

These long calls lock in the price where a stock can be purchased, letting investors cheaply control a move to the upside. They can also generate massive leverage, which is exactly what happened in this case. (See our Education section)

MUR started to climb as the trades piled up. It continued to advance throughout the session and ended the day higher by 3.69 percent to $57.93. But that was nothing compared with the options: The February calls more than quadrupled to $0.73, and the March contracts rose all the way to $1.40. They traded more than 8,000 and 4,600  respectively, well above the previous open interest at each strike.

The stock tanked on a poor earnings report last month but found support around the same $55 level where it bounced in November 2012.

Calls outnumbered puts by a bullish 4-to-1 ratio on Friday, and total option volume was 37 times normal levels.

(A version of this post appeared on InsideOptions Pro on Friday.)



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.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: MUR

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