Bulls bet on breakout in oil services
Bullish traders are looking for the Market Vectors Oil Services ETF to break out of its recent range.
optionMONSTER's Heat Seeker system detected the purchase of 4,000 January 48 calls in one print for $0.76 this morning. Open interest in the strike was just 1,128 contracts before the session began, showing that this is fresh buying.
These long calls lock in the price where the stock can be purchased through mid-January 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 $48. (See our Education section)
The OIH is up 0.88 percent to $44.67 today. The exchange-traded fund fell sharply with the price of crude oil after starting September above $55, and traders bought puts on several occasions during that decline. But shares have been range-bound between $43 and $46 for the last three weeks, and the option action has turned bullish recently.
Total option volume in the OIH is below its full-session average 30 minutes into the session, but overall calls outnumber puts by about 9 to 1 so far.
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