Rosetta pullback brings out the bulls

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One trader apparently believes that Rosetta Resources is on its way back.

optionMONSTER's Heat Seeker tracking system detected the purchase of 6,000 June 50 calls for $1.20. Equal-sized blocks were sold the June 35 puts for $0.50 and the June 55 calls for $0.25. There was essentially no open interest in any of the three strikes before the trade appeared.

The activity resulted in a cost of $0.45 and has the potential to earn a maximum profit of more than 1,000 percent if the shares close at or above $55 on expiration. The strategy combines elements of a combination trade and a bullish call spread . (See our Education section)

ROSE gained 0.24 percent to close at $45.76 yesterday but has lost about 15 percent of its value since mid-March. It's attempting to make a higher low around its current level than the levels where it bounced in October, December, and January.

The company focuses on extracting oil and natural gas from unconventional shale fields . Huge discoveries focused investor attention on the industry group last year, but it has underperformed more recently as a supply glut depressed natural-gas prices. Last week, regulators approved a natural-gas exporting station in Louisiana.

That could put the U.S. back on the map as a major energy exporter for the first time in decades. Heat Seeker also detected bullish call buying in another shale name, Kodiak Oil & Gas , recently, so investors may now be regaining interest in the group.

Overall option volume in ROSE was 14 times greater than average in yesterday's session.



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: ROSE

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