Bulls look for Enbridge to bounce


Pipeline company Enbridge Energy is drawing bullish option activity.

optionMONSTER's tracking programs Friday showed the purchase of about 2,800 December 27.50 calls, most of which priced for $0.85. Volume was more than 50 times open interest at the strike, indicating that new positions were initiated.

Those calls lock in $27.50 as the purchase price on EEP shares in the next five weeks, no matter how high the stock goes. That will provide significant leverage in the event of a rally, but the contracts will lose all their value from even a modest decline.

EEP rose 2.36 percent to $28.25 on Friday and is trying to build support around the same $27.50 area where it bounced in June. The stock had peaked above $30 earlier this month.

Total option volume in the name was 5 times greater than average in the session, with calls outnumbering puts by a bullish 32 to 1.

(A version of this post appeared on InsideOptions Pro on Friday.)

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