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Traders are hunting for value in Ultra

Traders think Ultra Petroleum is ready to stop its losing ways.

The Houston-based energy company came into the session down more than 40 percent in the last year, significantly lagging its peers in that time. But in the last month the stock has been attempting to hold its ground at its lowest level since mid-2004, and now the bulls are stepping in.

optionMONSTER's Heat Seeker monitoring program lit up early with the April 19 calls. The initial blocks priced for $0.35, followed by prints for $0.45, $0.55 and $0.65. Volume now surpasses 13,000 at the strike, compared with previous open interest of just 1,265 contracts.

Those long calls lock in the price where investors can buy UPL. That will provide them with upside exposure if it continues to climb, while limiting the amount of capital at risk in the event of a drop. (See our Education section for more on how options can be used to manage trades.)

UPL is up 8.78 percent to $18.47 in afternoon trading. More than 30,000 contracts have changed hands so far today, about 5 times greater than average. The Heat Seeker shows calls outnumbering puts by a bullish 5-to-1 ratio.

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.

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