Is Forest Oil finally ready to bounce?

optionMONSTER

Bullish traders are piling into Forest Oil as the stock tries to bounce at its July lows.

optionMONSTER's trade scanners yesterday detected heavy buying in the December 8 calls, which totaled more than 4,200 contracts compared with previous open interest of just 105. Almost all the trades priced for $0.10.

Those buyers locked in an $8 entry price in the oil stock for the next 4-1/2 weeks. The calls stand to generate big leverage if the shares rally but will expire worthless if the stock doesn't move. (See our Education section)

FST fell 1.19 percent to $6.62 yesterday but came off its lows as the calls hit. Last week the shares held the same $6 level where they bottomed over the summer, which could be leading some traders to believe that the oil and gas company is ready to rebound.

Total option volume was 9 times greater than average in the session, with calls outnumbering puts by more than 7 to 1.

(A version of this post appeared on InsideOptions Pro yesterday.)

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