Call buyers give Questar time to rally

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The bulls have already cleaned up in natural-gas company Questar, and yesterday they came back for more.

optionMONSTER's Heat Seeker tracking program detected the purchase of more than 3,000 July 26 calls, most of which priced for $0.30. Volume was almost twice the strike's previous open interest, which indicates that new money was being put to work.

These long calls lock in the price where shares can be purchased, so they have the potential to generate significant leverage if the stock rallies. They also provide upside exposure at a low cost, limiting the amount of money that can be lost in a pullback. (See our Education section)

STR fell1.69 percent to $24.96 yesterday but is up 26 percent so far this year. It also lit up our monitors back in January and February , throwing off profits of more than 100 percent as the shares advanced.

Total option volume was 7 times greater than average in the session, with not a single put trading all day.

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



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: STR

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