Valero Energy has pulled back, and the bulls are stepping in.
optionMONSTER's Heat Seeker monitoring program yesterday detected the purchase of 10,000 December 60 calls for $4.10 and the sale of an equal number of December 70 calls for $1.45. Volume was more than 40 times the previous open interest in each strike, which indicates that new positions were initiated.
Known as a bullish call spread , the trade will control a move between $60 and $70. The trader will collect $10 if the stock reaches the top of that range, almost 3 times the initial $2.65 cost. (See our Education section for more on the leveraging potential of options.)
VLO rose 0.27 percent to $56.52 yesterday but is still down from a six-year high of $59.96 reached last week. The refinery company has been exploding higher since early October and reported strong earnings on April 29.
Total option volume was triple average amounts in the session, according to the Heat Seeker, with calls outnumbering puts by more than 5 to 1.
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