What investor sees in Newfield

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Newfield Exploration has been coming to life, and traders are apparently counting on the positive trend to continue.

optionMONSTER's scanning programs detected unusual activity in the oil driller on Friday, with almost 21,000 contracts changing hands versus average volume of some 3,700. Half the activity occurred in just two strikes, the October 26 calls and the October 28 calls.

While some of the pricing was unclear, it appears that roughly 5,000 of the 26 calls were sold for $1.45 to $1.65 and 5,000 of the 28s were bought for $0.47 to $0.63. Volume was below open interest at the lower strike, indicating that an existing long-call position was closed and rolled up to the 28s.

We reported last Monday that the 26s were bought for $0.83, so it seems that the investor adjusted a winning trade higher. He or she collected about $1 in the process, recovering more than the initial investment while staying in the trade further potential gains. (See our Education section for more on how to manage trades more effectively with options.)

NFX rose 1.28 percent to $26.83 on Friday, bucking a decline of more than half a percent in the S&P 500. The stock has lagged the broader market for years but outperformed in the last month as management shifts away from natural-gas and overseas operations. It's now focusing on North American oil production and forecasts rapid growth at its Cana field in the Anadarko Bain and the Uinta field in Utah.

The stock has also delivered the biggest price increase of any company in the SPDR Energy Sector Fund (XLF) in the last month, as seen in the partial listing below from our researchLAB market scanner.

Calls accounted for almost four-fifths of Friday's volume, which is also bullish.

Disclosure: I own NFX shares.


(Graphic courtesy of researchLAB)



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: NFX

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