Oil refiners are ripping higher again today, and traders are
cleaning up left and right in the space.
optionMONSTER's Heat Seeker scanning program has been flagging the
group steadily over the last month, and it was also highlighted in
a special report in our
webinar on Oct. 4. The thesis was simple: A widening spread between
American West Texas Intermediate crude and European Brent crude
would expand profits for the industry. And that's exactly what
. Buyers started gobbling up the February 60 calls for $0.49 early
last month with the stock near a 52-week low. They returned for the
December 55s at $1.45 three weeks later and then the May 60s for
$3.90 in mid-November. The February contracts are up more than 600
percent to $3.85, the Decembers almost tripled to $4.55, and the
May calls are up almost 50 percent.
was the other big winner. It initially appeared on Heat Seeker just
one day after TSO with buying in the December 39 calls. The March
38s hit the following week and then the March 40s near the end of
last month. Those December 39s have appreciated a stunning 1,600
percent, while the March 38s have tripled and March 40s have more
TSO rose 3.37 percent to $58.88 in afternoon trading and VLO is
climbing 3.70 percent to $45.99. Both are up more than 30 percent
since the beginning of October, well above the S&P 500's 7
percent gain over the same period.
Even more remarkable is the strength in refiners given the weakness
in the broader energy sector. (See our
market scanner to
into the SPDR Select Sector Energy fund over different time
periods. Its four best-performing members in the last month are
refiners, led by TSO.)
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