How one trader is playing EV Energy


Shutterstock photo

EV Energy has been climbing, and one investor is giving it more time to rally.

optionMONSTER's Heat Seeker monitoring system detected the purchase of 3,000 November 70 calls for $1.60 and the sale of a similar number of October 70 calls for $0.25. Volume was below open interest in the nearer-dated contracts, indicating that an existing position was closed and rolled forward in time.

The investor paid about $1.35 and has an additional month to profit from upside in the Houston-based name, which develops oil and gas fields. Time decay will accelerate in the October contracts as expiration approaches at the end of next week, so adjusting the position now saved him or her money. (See our Education section)

EVEP rose 0.43 percent to $65.32 yesterday. It's up 17 percent in the last two months and now appears to be breaking above its 200-day moving average. Some traders may consider that a bullish pattern but still think that it needs more time to push above $70.

The stock normally sees volume of just 616 contracts in a session, but yesterday's turnover was 13 times that amount. Calls outnumbered puts by a bullish 53-to-1 ratio, 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
Referenced Stocks: EVEP

More from optionMONSTER




Follow on:

Find a Credit Card

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