Is it time to buy C&J Energy?

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C&J Energy Services has pulled back after a big rally, and now the bulls are jumping on board.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 5,000 December 35 calls for $0.75 and the sale of an equal number of December 26 puts for $1 today, resulting in a credit of $0.25. Volume was more than 70 times the previous open interest in each strike, which indicates that new positions were initiated.

Buying calls locks in the price where a stock can be bought, while selling puts generates income and obligates the investor to get long in the event of a drop. Combining the two strategies is highly bullish because both halves of the trade make money to the upside and lose to the downside. They'll also take a beating if it drops much further. (See our Education section.)

CJES is down 3.96 percent to $28.77 in afternoon trading. The provider of fracking services rallied more than 50 percent between early January and late June thanks to the boom in domestic energy production. It fell despite reporting better-than-expected earnings and revenue last earnings on Wednesday afternoon.

Total option volume is more than 110 times greater than average so far in the session, 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 The NASDAQ OMX Group, Inc.

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


This article appears in: Investing , Options

Referenced Stocks: CJES

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