Magnum Hunter Resources has been a frequent target for the bulls recently, and the oil driller attracted another large buyer in the final minutes of yesterday's session.
optionMONSTER's Heat Seeker system detected the purchase of 4,000 January 9 calls in one print for the ask price of $0.25 just half an hour before the close. This is clearly a new position, as the volume was well above the strike's open interest of 1,691 contracts before the trade appeared.
These long calls , which lock in the price where the stock can be purchased, are looking for MHR to climb above $9.25 by early next year. They could be sold earlier at a profit if premiums rise with a rally before then, but the contracts will expire worthless if shares are below the $9 strike price in mid-January. (See our Education section)
MHR rose 0.9 percent yesterday to close at $6.75. The stock broke out of an extremely tight range around the $4 level in mid-August and hit a 52-week high of $7.21 last Friday.
Total option volume in MHR yesterday was double its daily average for the last month. Overall calls outnumbered puts by more than 15 to 1, further reflecting the session's bullish sentiment.
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