The bulls are betting on a gusher in Cobalt International
optionMONSTER's Heat Seeker monitoring program detected the
purchase of about 7,200 April 27.50 calls for $0.90 to $1 in volume
that was more than double the previous open interest of 3,498
contracts. More than two-thirds of the contracts traded in a single
block for $0.98.
lock in the price where investors can buy shares in the
oil-exploration company, which operates offshore in the Gulf of
Mexico and off the west coast of Africa. That will give them the
ability to generate significant leverage in the event of a rally,
but these options will expire worthless if the stock doesn't move
CIE is off fractionally at $26.78 in afternoon trading. The stock
gapped higher on Dec. 5 after a big oil discovery in at its North
Platte prospect in the Gulf of Mexico and has been consolidating
Today's activity suggests that investors think the stock will
continue to press higher in the next five weeks. Using the options
limits the amount of capital at risk, avoiding the difficulty of
selling shares if they're wrong. (See our
section for more ideas on managing positions.)
Some 8,600 contracts have traded in CIE so far today, more than
twice the average volume. Calls outnumber puts by a bullish 33-to-1
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.
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