Trader hopes for gusher in Valero

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Valero Energy is breaking free from an apparent resistance level, and one investor wants to ride the rally.

VLO 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 once again.

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 yesterday.

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)



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.

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This article appears in: Investing , Options

Referenced Stocks: TSO , VLO

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