Does Golar have more gas in its tank?


Shutterstock photo

Golar LNG has been ripping to new highs, and one investor is betting that there is more upside to come.

optionMONSTER's Heat Seeker tracking system detected the purchase of about 1,000 March 45 calls for $3.37 and the sale of an equal number of March 50 calls for $1.47, resulting in a cost of $1.90. Volume was below open interest in the 45s but not the 50s, so there are two possible explanations for the activity.

One is that both legs of the trade were opening positions, in which case it was a bullish call spread . That would earn a maximum potential profit of about 163 percent if GLNG closes above $50 on expiration.

The second possibility is that the investor owns shares in the tanker company and is using the options as part of a covered call strategy. That would also be bullish because the trader would be raising their exit price on the stock by $5. (See our Education section)

GLNG fell 2.38 percent to $43.53 yesterday, but has more than tripled since the beginning of the year. The company focuses on transporting compressed natural gas, which the United States is starting to export as shale production increases.

Overall option volume was 8 times greater than average yesterday, with calls outnumbering puts by 22 to 1, according to the Heat Seeker.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.

This article appears in: Investing , Options

More from optionMONSTER




Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by