Tesoro has been exploding higher, and one bull is looking for
even more upside.
optionMONSTER's Heat Seeker tracking program detected the purchase
of 3,750 December 17 calls for $0.66, less than one minute after
3,479 December 15 calls were sold for $2.19. Volume was below open
interest in the 15s, suggesting a long position was rolled to the
TSO rose 3.21 percent to $17.35 in early afternoon trading and is
up 34 percent in the last month. The oil refinery sector has been
one of the strongest in the market recently after lagging for most
of the post-crisis rally.
Companies are now reaping the benefits of reduced capacity at the
same time that demand rebounds, which is driving margins wider and
Tesoro has been the object of several bullish trades recently: On
Nov. 22 Heat Seeker detected the purchase of a December 16/18 call
spread for $0.50, which has now more than doubled to $1.12. And Jon
noted buying yesterday in the December 18s outright, and those are
higher by more than 60 percent today.
Today's trade lets the investor receive a credit of about $1.50
while leaving exposure to further upside. It also increases the
position's gamma to 32 from 6, which will increase leverage if the
shares continue higher. (See our Education section)
Overall option volume in the stock is 6 times greater than average
so far today, with calls outnumbering puts by 7 to 1.
(Chart courtesy of tradeMONSTER)
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