BP has pulled back with the rest of the energy sector, but one large trader is betting on a comeback by next spring.
optionMONSTER's Heat Seeker system detected the purchase of 8,147 April 50 calls in one print for the ask price of $0.42 yesterday. Open interest in the strike was just 577 contracts before trade appeared, showing that this is a new position.
These long calls lock in the price where the stock can be purchased through mid-April 2015 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 $50. (See our Education section)
BP fell 1.19 percent to $43.16 yesterday. The energy company is down more than 18 percent in the last three months.
Yesterday's total option in BP was more than quadruple its daily average for the last month. Overall calls outpaced puts by nearly 2 to 1.
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