Gulfport Energy has been bullish before, and one investor
apparently thinks that it will be again.
optionMONSTER's Heat Seeker tracking program detected the purchase
of 10,323 January 67.50 calls for $1. An equal number of April 80
calls was sold at the same time for $0.75, but volume at that
strike was below open interest. This suggests that an existing
trade was adjusted to the nearer strike.
The investor probably
the April 80 calls when the stock was trading higher, looking for a
continued rally, but then it pulled back. Adjusting the position
doubled the position's
from 0.10 to 0.20, meaning it would have more leverage to a rebound
and need less appreciation to make money.
It also demonstrates the value of options as a risk-management tool
because those longer-dated April calls had more
and were therefore less vulnerable to a pullback. That partially
protected their capital and made it possible to modify the position
later. (See our
GPOR rose 2.87 percent to $59.07 yesterday and had climbed steadily
along with other domestic energy companies. It almost doubled
between the start of the year and mid-October before pulling back.
There were also bullish option trades on
, both of which threw off nice profits in later sessions.
Almost 22,000 contracts traded yesterday, more than triple the
daily average. Calls outnumbered puts by a bullish 100-to-1 ratio.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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