Traders are betting that Spectra Energy will rebound by the end of the year.
About 4,000 December 43 calls were purchased on Friday, most of them for $0.40, according to optionMONSTER's Heat Seeker tracking program. Open interest in the strike was just 634 contracts before the session began, showing that this is clearly fresh buying.
These long calls lock in the price where the stock can be bought through mid-December no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, providing potentially significant leverage, but the contracts will expire worthless if shares remain below $43. (See our Education section)
SE fell 1.99 percent to $39.84 on Friday. The natural-gas company has pulled back since its recent highs above $42 early this month and is now back to a level where it bounced in early August.
Friday's total option volume in Spectra more than quadruple its daily average for the last month. Overall calls outnumbered puts by 3.5 to 1, a reflection of the session's bullish sentiment.
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