One investor is making a long-term bet Southwestern Energy, looking for a rally over the next 18 months.
optionMONSTER's Heat Seeker monitoring system detected the purchase of 3,000 January 2014 33 calls for $3.75 and the sale of an equal number of January 23 puts for $3.20. There was barely any open interest at either strike before the trade appeared.
If the shale-oil stock pushes higher, the long calls will appreciate and the puts sold short will lose value. But the opposite will be true to the downside, making the strategy similar to owning shares. The main difference is that it will generate much more leverage because it cost just $0.55 to open and will track movements in the share price less closely as time passes.
SWN rose 2.26 percent to $28.05 in morning trading. It's down more than 16 percent in the last six months and is sitting at its lowest levels in more than three years.
The bullish trade pushed total option volume in the name to more than twice the average amount so far today.
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