Call spread bets on bounce in Murphy Oil

By optionMONSTER,  April 13, 2012, 05:10:37 AM EDT

Murphy Oil has been falling for more than a month, and now the bulls are stepping in.

optionMONSTER's Heat Seeker tracking system detected the purchase of 2,000 July 55 calls for $2.95 and the sale of an equal number of July 60 calls for $1.30. Volume was above open interest in both contracts.

The trade cost $1.65 and will earn a maximum profit 203 percent if the stock closes at or above $60 on expiration. It's known as a call spread because it leverages a move between two prices. (See our Education section)

MUR rose 2.95 percent to $53.45 yesterday. It began March around $64 but has been following the rest of the energy sector lower since then. The shares are now attempting to bounce at a higher level than the lows made in late 2011, which some chart watchers may consider a bullish pattern.

The company, which explores for oil globally and sells gasoline in the United States, is scheduled to report first-quarter results on May 3.

Overall option volume in MUR was almost twice its daily average yesterday, according to the Heat Seeker. Calls outnumbered puts by 7 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.


This article appears in: Investing, Options

Referenced Stocks: MUR



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