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• Strategy takes dim view of energy ETF

• VLO 67% Rate It

One investor sees Valero Energy heading back to its pre-crash levels.

The San Antonio-based oil refiner hasn't seen $35 since September 2008, shortly before the failure of Lehman Brothers sent financial markets into a tailspin. On Friday, our Heat Seeker tracking program detected a large trade that will generate huge profits if the shares return to that price by early next year.

It entailed the purchase of 11,996 January 30 calls for $0.69 and the sale of an equal number of January 35 calls for $0.19. Volume exceeded open interest at both strikes, indicating that a new position was initiated.

Known as a bullish call spread because it leverages a move between two price points, the trade cost $0.50. It will start making money anywhere over $30.50, with a maximum profit of 900 percent at $35.

VLO rose 0.92 percent to $24.15 in the session. While the stock is up 14 percent in the last week, it's been churning in range for the last 18 months. The Heat Seeker also showed bullish call buying in the January 2014 contracts five days earlier.

Many stocks have encountered resistance around the same levels where they traded in September 2008, so Friday's trader may expect VLO to gravitate to that level and then stall. Investor sentiment toward energy-related companies also improved dramatically last week.

Overall option volume was quadruple the daily average, with calls outnumbering puts by 9 to 1. The next quarterly earnings release is scheduled for the morning of July 31.

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