Bulls come back to Kinder Morgan

Mike Yamamoto (mike.yamamoto@optionmonster.com)
June 5, 2014

The bulls are coming back to Kinder Morgan as shares trade above key levels.

About 8,000 KMI July 35 calls were purchased in 5 minutes this morning, with the largest blocks of 3,524, 1,034, and 994 going for $0.51, according to optionMONSTER's Heat Seeker tracking system. The volume was well above the strike's previous open interest of 2,161 contracts, indicating that this is fresh buying.

These long calls lock in the price where the stock can be purchased for the next six weeks 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 lose value if shares stall or pull back. (See our Education section)

The call buying follows bullish KMI option activity last month in the September and December strikes.

KMI is up 1.56 percent to $34.58 in midday trading, rising above its 200-day moving average for the first time since early September. The energy-pipeline operator had been trapped below resistance at $34 since mid-February.

Total option volume in the name has surpassed 12,500 contracts today, more than 70 percent higher than its full-session average for the last month. Overall calls outnumber puts by a bullish 12-to-1 ratio.

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