Credit: Shutterstock photoValero Energy has been consolidating after a big run, and one investor is looking for more upside this year.
Our Heat Seeker system detected the purchase of 10,000 September 31 calls for $1.53 and the sale of an equal number of September 34 calls for $0.78, resulting in a net cost of $0.75. This bullish call spread will earn a maximum profit of 300 percent if the Texas-based oil refiner rallies to at least $34 by expiration.
VLO fell 0.78 percent to $0.78 yesterday. The stock almost doubled between September and mid-February as better demand drove refining margins wider, but it has been consolidating since then. During that time, it has been making incrementally higher lows, which some chart analysts may consider evidence that it remains in a bullish uptrend.
The last earnings report on April 26 was hurt by one-time items, but revenue crushed forecasts and management projected a strong year.
Calls accounted for a bullish 91 percent of the volume in yesterday's session, according to the Heat Seeker.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
