Bulls like Encana before earnings

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Encana reports earnings tomorrow, and the bulls are getting long today.

optionMONSTER's Heat Seeker monitoring system detected the purchase of roughly 40,000 July 22 calls, starting with a block of 30,000 contracts for $0.40. Subsequent large prints crossed for as much as $0.55, pushing volume to almost 35 times previous open interest at the strike.

Those long calls give traders the right to buy stock in the Canadian energy company for $22 through the summer, no matter how high it might climb in that period. The contracts can also generate significant leverage if a rally unfolds. (See our Education section)

ECA is up 0.82 percent to $18.48 in afternoon trading. It lost about half its value in 2011 and has been shuffling at the bottom of its long-term price range for most of the last year despite improving results. With quarterly results due before the opening bell, today's buyers stand to benefit from a strong report.

Total option volume is 12 times greater than average so far in the name, according to the Heat Seeker, with calls outnumbering puts by more than 100 to 1.

Other energy companies, including Canadian Natural Resources, Murphy Oil, Stone Energy, and Super Energy Services have seen upside option activity in recent sessions.



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: ECA

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