Markets

Bulls refine upside trade in Valero Energy

Valero Energy has been ripping, and one investor is looking for the rally to continue.

optionMONSTER's Heat Seeker monitoring system detected the purchase of 10,000 March 40 calls for $0.45 and the sale of an equal number of January 40 calls for $0.22. Volume was below open interest in the January contracts but not March, which indicates that an existing position was closed and rolled further out in time.

The trade cost $0.23 and will provide the investor with an additional two months of upside exposure to the oil refiner. It also raised the delta of their position to 0.14 from 0.10, which increases their leverage. (See our Education Section .)

VLO rose 1.24 percent to $30.12 in afternoon trading and is up 38 percent in the last three months. It's been exploding higher as investors flock back to energy companies. Investors also like a plan to potentially spin off its gas stations into a separate company.

Overall option volume in the name is more than triple the daily average so far in the session, with calls outnumbering puts by more than 5 to 1.

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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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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