Bulls think Halcon is going higher

optionMONSTER

Yesterday the bulls piled into Halcon Resources, an independent energy company operating onshore in the United States.

optionMONSTER's tracking programs detected a surge of activity in the January 2015 12 calls, mostly for $1.10. Almost 22,000 contracts changed hands against previous open interest of just 2,607. The May 8 calls were also bought early for as little as $0.20 and then doubled to more than $0.50 as the shares climbed.

That gives an idea of the kind of leverage that can be achieved with options. It works because calls only lock in a right to buy shares, rather than real ownership. It costs little to establish the position, so even a modest fluctuation in the underlying stock price can result in big profits -- like we saw with the May 8s.

HK was trading for about $7.40 when the options hit, and then shot as high as $7.74 before closing yesterday's session up 5.51 percent to $7.66. It peaked around $12 in early 2012.

The company is the latest of many domestic U.S. energy companies to draw bullish activity in recent sessions. Tuesday also saw call buying in Nabors Industries , while Onoek Partners and Energy Transfer lit up our scanners on Monday. Total option volume in HK was 11 times greater than average. Calls outnumbered puts by more than 10 to 1.

 

 



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