Laredo Petroleum hit all-time highs after holding an "investor update" meeting yesterday, and option traders are looking for even more gains.
Nearly 2,000 October 30 calls were bought as premiums more than doubled from $0.50 to $1.10 yesterday, according to optionMONSTER's Heat Seeker tracking system. These are new positions, as the volume was far above the strike's previous open interest of just 186 contracts.
The calls lock in the price where traders can buy the stock through mid-October no matter how far it might climb, offering the potential for significant leverage. These options could be sold earlier at a profit if premiums rise further with the stock price, but the contracts will expire worthless if shares remain below $30 for the next five weeks. (See our Education section)
LPI peaked at at $29.08 before finishing yesterday up 5.96 percent to $28.64. Those were new intraday and closing highs for the Oklahoma-based oil and natural-gas company, which operates in the Permian Basin and went public in December 2011.
Total option volume in the name was 17 times higher than its daily average for the last month. Overall calls outnumbered puts by more than 13 to 1, a reflection of the day's bullish sentiment.
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