Energy pipelines have been hot, and yesterday a massive trade
occurred in Williams.
optionMONSTER's Heat Seeker monitoring program detected the
purchase of 105,000 January 50 calls for $0.17 and the sale of a
matching number of January 45 calls for $0.71. Volume was below
open interest in the 45s, indicating that an existing position was
closed and rolled to the higher strike.
Given their cheap price, long-dated calls can
generate significant leverage
from a rally even if they remain out of the money. The strategy
provides upside exposure at a much lower cost than owning the
shares outright. (See our
WMB fell 0.34 percent to $37.75 yesterday but is up 16 percent so
far this year. It's been trending steadily higher as investors
focus on the resurgence of domestic gas production in the United
The call roll was one of the largest trades of the session and made
WMB the second-busiest company in the entire option market. It's
normally not even in the top 30, according to the Heat Seeker.
Calls outnumbered puts by more than 135 to 1.
There was also a call roll yesterday in
, another pipeline that's broken out to record levels. The investor
has already made at least $4 million on the trade and is looking
for the shares to keep running through August.
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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