McMoRan draws leveraged play

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McMoRan Exploration is attempting to bounce at a 52-week low, and investor is getting long.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 5,000 February 14 calls for about $1.60. An equal number of February 8 puts was sold at the same time for approximately $1.07. There was barely any open interest in either strike when the session began.

The trade cost about $0.53 and is similar to owning shares in the New Orleans-based offshore driller. It will make money if MMR pushes toward or above $14 and lose money toward $8. However, unlike a simple long position in the stock, performance will track the shares less closely as time passes.

And, if MMR stays between the strike prices, it will expire worthless. See our Education Section for more.

MMR rose 1.06 percent to $11.41 in morning trading. It popped in late June on bullish news about "Davy Jones" property, but then fell along with the rest of the market earlier this month. It's now back to levels where it traded last summer before ripping higher.

Overall options volume in the name is about twice the average amount so far today.



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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This article appears in: Investing , Options

Referenced Stocks: MMR

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