Patterson-UTI attracts bullish strategy

By David Russell,

Shutterstock photo

Patterson-UTI Energy has more than doubled since mid-2010, and one investor is positioning for more upside.

optionMONSTER's Heat Seeker tracking system detected a surge of call activity in the Texas drilling company. Some 5,000 January 25 calls were sold for $7.75 against existing open interest, indicating that an existing long position was closed. Seconds later, a block of 2,850 January 31 calls was purchased for $4.10.

The trader collected a credit of about $2.71 million and will still make money if PTEN continues to rally. In addition to letting the investor take profits, rolling to the higher strike increased the position's gamma from 2.80 to 4.76--meaning that the options will become increasingly leveraged to upside in the share price. (See our Education section)

PTEN is up 0.68 percent to $31.18 in afternoon trading. The company reported better-than-expected earnings and revenue this morning, fueled by higher rates and an increased number of rigs in operation.

Overall option volume in the stock is 5 times greater than average, with calls outnumbering puts by more than 290 to 1.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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

This article appears in: Investing Options
Referenced Stocks: PTEN

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