Boardwalk Pipeline has pulled back after a big rally, and traders apparently think that it still has gas in the tank.
optionMONSTER's Heat Seeker monitoring program detected the purchase of 28,000 March 18 calls for $1.75 yesterday. An equal number of September 17.50 calls was sold for $1.05, but volume was below the strike's previous open interest. This suggests that an existing long position was rolled from one contract to another.
Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost by expiration at the end of tomorrow's session. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.
Money can also be swapped from one contract to another, which is what happened yesterday. Making the adjustment cost $0.70 and provided an additional six months to profit from gains in the stock. (See our Education section)
BWP fell 0.05 percent to $18.73 yesterday. The natural-gas pipeline operator lost more than half its value between late 2013 and early this year, then turned around and proceeded to rally more than 60 percent through late August. Our InsideOptions Pro subscribers doubled their money riding some of that move.
Total option volume in the name was 31 times greater than average in the session, with calls outnumbering puts by more than 100 to 1.
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