The bulls can't get enough of Newfield Exploration.
optionMONSTER's Heat Seeker monitoring system has shown a steady flow of upside activity in the oil company, which is attempting to lift itself from a three-year selloff. Investors have reaped rich rewards from the name, and are coming back for more today.
This time, a trader sold 6,000 November 27 puts for $1.40 and bought an equal number of October 28 calls for $0.50. He or she collected $0.90 in the process.
The investor now stands to profit from a rally over the next three weeks and has agreed to be buy NFX for $27 if it closes below that level on November expiration one month later. Overall, the trade reflects a belief that downside risk is minimal and the shares are likely to rise.
NFX is up 0.11 percent to $27.41 in morning trading, reversing earlier losses. The stock has climbed 15 percent in the last month, making it the best-performing energy name in the S&P 500 during that time. On a year-to-date basis, however, it's the second worst, according to our researchLAB market scanner.
The company has been regaining favor recently as management focuses on North American oil production and shifts away from overseas operations.
Today's bullish strategy combines put selling with long calls but is unusual because it employs different expiration months. (See our Education section for the myriad ways calls and puts can be mixed to achieve your trading objectives.)
Total option volume is triple the daily average so far in the session, according to the Heat Seeker.
Disclosure: I own NFX shares.
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