Williams buyers target historic highs

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A huge trade is betting that Williams is headed back to levels it hasn't seen since before the fall of Enron.

optionMONSTER's Heat Seeker tracking system detected the purchase of 75,000 October 36 calls for $0.57 and the sale of an equal number of October 38 calls for $0.11. Volume was more than 100 times open interest in each strike, so this is clearly a new position.

This bullish call spread cost $0.45 and will earn a maximum profit of 344 percent if WMB closes at $38 on expiration. It hasn't traded that high since September 2000. (See our Education section)

The natural-gas stock rallied 2.12 percent yesterday to a multi-year closing high of $34.69. It had bottomed around $1 in 2002 after the collapse of Enron nearly bankrupted several energy-trading firms. The shares rallied back to $33 by June 2008 but crashed to $10 after the mortgage bubble imploded.

They've been climbing steadily since then, including a gain of more than 25 percent so far this year. Energy names have been especially strong of late as investors have accurately anticipated positive developments in the European debt crisis and more quantitative easing by the Federal Reserve.

Overall option volume in the name was triple its daily average in yesterday's session, according to the Heat Seeker. Calls outnumbered puts by 125 to 1.



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.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: WMB

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