Cenovus Energy was one of several Canadian energy companies that rallied with upside option action yesterday amid the turmoil in Iraq.
optionMONSTER's tracking systems detected heavy buying in the December 35 calls yesterday morning, with more than 12,000 trading for $0.30 to $0.75. About the same time, a block of 7,500 December 25 puts was sold for $0.15. Volume dwarfed the previous open interest in each strike, indicating that this is new positioning.
The long calls will increase in value with gains in the stock while the price of the puts dwindle. But the opposite will occur if the shares drop, and traders will be on the hook to buy the stock if it falls below $25. (See our Education section for more on trades that combine call buying with put selling .)
CVE rose 3.42 percent yesterday to close at $30.86, just off its 52-week high of $31.60 reached last July. The stock had been drifting higher since bouncing off is 200-day moving average about a month ago.
The Calgary-based oil and natural-gas company is scheduled to report quarterly results on July 30. The bullish trading in the name followed call buying in two other Canadian energy producers-- Suncor Energy and Canadian Natural Resources --that was posted on our InsideOptions Pro subscription service yesterday.
Total option volume in CVE exceeded 21,500 yesterday, compared to a daily average of just 111 contracts in the last month.
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