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Trader expects Holly to pop on earnings

Holly reports earnings tomorrow morning, and one investor is looking for another stab to the upside.

optionMONSTER's Heat Seeker tracking system detected the purchase of 4,000 May 65 calls for $0.50 and $0.55. An equal number of May 50 puts were also at the same time for $0.50, resulting in a cost of less than $0.05 overall.

It has the potential to earn huge profits if HOC rallies quickly to $65 or higher and will lose money to the downside. However, given the fact it only has three weeks until expiration, the position will lose its link to the underlying shares at an accelerating pace and expire worthless if the stock remains between the two strike prices on May 20.

HOC fell 1.64 percent to $56.95 yesterday and has more than doubled in the last year. The shares have been enjoying an explosive run along with other oil refiners as margins improve across the sector. Yesterday's session also saw a bullish trade in Valero Energy.

Overall options volume in HOC was 10 times greater than average in the session.

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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