Valero Energy is breaking free from an apparent resistance
level, and one investor wants to ride the rally.
optionMONSTER's Heat Seeker tracking system detected the purchase
of about 24,600 January 22.50 calls for $0.40 and the sale of about
the same number of December 20 calls for $0.86. Volume was below
open interest in the December calls, so a position was probably
rolled from one contract to the next.
The trade let the investor recover about $0.46 of principal and
gain an additional month of long exposure. This strategy is
commonly used to take profits without divesting stock.
VLO rose 2.83 percent to $20.73 yesterday. The oil refiner rallied
some 25 percent between early September and mid-November, then
spent about three weeks consolidating and is now running higher
The industry has been among the most bullish in the entire market
in the last month as improving demand leads investors to price in
better refining margins. There was also a large call roll in Tesoro
Overall option volume in VLO was 20 times greater than average
yesterday, with calls accounting for 90 percent of the activity.
(Chart courtesy of tradeMONSTER)
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