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
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.
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