One investor is getting greedy in Patterson-UTI Energy.
Last week , our Heat Seeker monitoring system detected heavy buying in the February 24 calls for $0.05. The contract-drilling company reported strong quarterly results the next day, sending the shares higher by about 14 percent.
The February calls tripled in the process, but instead of taking profits, the investor is doubling down. He or she sold them yesterday for $0.15 and purchased another 3,000 March 25 calls for $0.30. That's an incremental debit of $0.15, raising the total cost to $0.20 per contract.
In return, the trader gets an additional month of upside exposure . The investor stands to keep profiting if the stock continues to climb but will see the premiums on those calls dwindle if it doesn't. The trade comes against a backdrop of strong performance in the energy sector as the global economy improves and domestic drilling activity strengthens.
PTEN rose 0.68 percent to $23.74 yesterday and is up 27 percent so far this year. Total option volume was triple its daily average in the session, according to the Heat Seeker. Calls outnumbered puts by more than 100 to 1.
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