Bulls come back to Hercules Offshore

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The bulls targeted Hercules Offshore yesterday, and they're coming back today.


optionMONSTER's Heat Seeker tracking program detected the purchase of about 3,400 May 8 calls for $0.35 o $0.40. That follows buying for $0.20 to $0.30 yesterday.

Long calls
lock in the price where investors can buy shares in the oil-service stock. Given their low price, they can generate tremendous leverage on a percentage basis if shares move in the right direction. (See our Education section.)

The strategy makes a lot of sense in the case of a stock like HERO, which is challenging a long-term resistance level in place since mid-2009. Some traders may expect a big move if it breaks out while remaining concerned about a drop. Calls provide upside exposure cheaply while limiting the amount of capital at risk in the event of a pullback.

HERO is up 1.38 percent to $7.36 in morning trading and has risen 48 percent in the last six months. Total option volume is 7 times greater than average so far today, according to Heat Seeker. Calls outnumber puts by a bullish 20-to-1 ratio.



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: HERO

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As of 5/29/2015, 04:15 PM


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