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
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
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
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
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