Fracking stocks have been emerging as a strong group in the last week, and today the option activity is focusing on Heckmann.
optionMONSTER's tracking programs detected the sale of 5,000 September 3 puts in the company, which provides water to energy companies extracting oil and gas from deep within the earth. The contracts priced for $0.20.
The put seller is now obligated to buy shares of HEK for $3 if they close below that level on expiration. If it doesn't, he or she will keep the $0.20 and the options will expire worthless. Such trades often mark bottoms in share prices and reveal a strong willingness to get long. (See our Education section for more.)
HEK is up 3.63 percent to $4.28 percent in afternoon trading. While the stock is still down about half from its levels in 2008, it has been bottoming out in the last six months and was propelled higher by strong earnings announced on Monday afternoon.
"We believe the challenges of 2012 are subsiding--capital budgets are being reset and we see increased momentum from high oil prices," CEO Mark Johnsrud said in the quarterly report. He also said the company now stands to benefit from past investments as demand increases.
Price action has been positive in other fracking companies followed by our researchLAB market scanner, which categorizes stocks thematically. Others including CJ Energy Services and Flotek Industries have also been gaining momentum.
The group came into today's session up more than 5 percent in the last week, while the broader energy sector was up less than 1 percent in the same period.
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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.
