Energy bulls focus on Halliburton
The option action has been very bullish in oil-servicing
companies, and yesterday Halliburton was the beneficiary.
optionMONSTER's tracking systems show the purchase of 7,750 January 40 puts for $0.65 and the sale of an equal number of January 47 puts for $2.06. Volume was below open interest in the 40s, which suggests that an existing short-put position was closed and rolled to the higher strike.
Selling puts generates income while obligating investors to buy shares if they tank. In the case of yesterday's transaction, the trader apparently made money selling the 40s as HAL pushed back to its highest levels in more than two years. The trader collected an additional $1.41 of premium by adjusting the position, while raising by $7 the level at which he or she must get long.
The net result of the trade is bullish, reflecting confidence that downside is limited. (See our Education section for more on how to turn expectations into income with options.)
HAL rose 0.12 percent to $50.32 and is up 45 percent on the year. We've also seen bullish activity recently in other oil-servicing names such as Schlumberger , Weatherford , and Cameron .