Bulls keep charging into Encana
Encana has been coming to life, and the bulls are piling in.
optionMONSTER's Heat Seeker system detected the purchase of almost 29,000 October 23 calls in the Canadian natural-gas producer, most of which priced for $0.85 to $0.90. Volume was more than 40 times the strike's previous open interest, which indicates that new money was put to work.
These long calls lock in the price where a stock can be purchased, letting investors cheaply position for a rally. They can also generate significant leverage from a move in the right direction, which has already happened in this stock.
On Feb. 25 we cited July 21 call buying for about $0.55, at a time when ECA traded for $18.99. Yesterday it climbed 2.09 percent to close at $20.49, and those July 21s had doubled to $1.15. (See our Education section)
Total option volume in ECA was 6 times greater than average in yesterday's session, with overall calls outnumbering puts by a highly bullish 17-to-1 ratio.
(A version of this post appeared on InsideOptions Pro yesterday.)
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