Long-term bulls like Linn Energy

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Linn Energy reports earnings this week, and traders are already taking a long-term bullish view on the name.

About 3,900 January 25 calls were bought on Friday, most of them priced at $3.70 and $3.90, according to optionMONSTER's Heat Seeker monitoring system. The volume was well above the strike's previous open interest of 1,289 contracts, indicating that new positions were initiated.

Long calls lock in the price where a stock can be purchased, allowing investors to position for a rally with much less capital than they would need to buy shares up front. The contracts can provide significant leverage on a move higher but will lose value if the stock drops. (See our Education section)

LINE fell 0.83 percent to $28.56 on Friday. The stock gapped down from the $33 level with the company's last earnings report in late February and continued to decline throughout March. It has been trading sideways for the last month.

The oil and natural-gas producer is scheduled to release quarterly results on Thursday before the opening bell.

Overall option volume in Linn topped 7,300 contracts on Friday, double its daily average for the last month. Total calls outpaced puts by a bullish 5-to-1 ratio.

(A version of this post appeared on InsideOptions Pro on Friday.)




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: LINE

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