For the second session in a row, the bulls targeted Southwestern Energy yesterday.
optionMONSTER's Heat Seeker tracking program detected the purchase of more than 8,000 September 43 calls for $0.87 to $0.90. Volume was more than twice previous open interest of 3,378 from Tuesday's buying, which means that traders put even more money to work on the long side.
These long calls lock in the price where shares of the natural-gas producer can be bought. Investors use the contracts to prevent stocks from running away from them at a fraction of the cost of buying the shares outright. Their relatively cheap price can also result in significant leverage on a percentage basis. (See our Education section)
SWN fell 1.21 percent to $37.57 yesterday but is up 37 percent in the last year. The stock found support at its 200-day moving average early in January and February but has bounced at its 100-day more recently. That suggests a potential acceleration of its bullish uptrend.
Total option volume was 6 times greater than average in the session, with calls outnumbering puts by 23 to 1.
(A version of this post appeared on InsideOptions Pro yesterday.)
More From optionMONSTER
- Huge trade remains bullish on Avon
- Why traders are selling puts in MGIC
- Trader hedging Rex Energy at highs
- Investment & Company Information