Long-term bull buys Penn Virginia

optionMONSTER

Penn Virginia ended last year with a bang, and a long-term trade is looking for the rally to continue.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 2,500 January 2016 17 calls for $1.60 and the sale of an equal number of January 2016 5 puts for $0.60, resulting in a cost of $1. There was no open interest at either strike, so new positions were clearly initiated.

Buying calls locks in the price where a stock can be purchased, while selling puts obligates the trader to buy shares if they fall to a certain level. Combining the two strategies is highly bullish because the investor uses the premium from writing puts to buy calls. (See our Education section)

PVA is up 5.58 percent to $10.40 in midday trading and has more than doubled since the beginning of September. Investors have been piling into the oil stock as production increases and costs fall.

Total option volume in the name is already more than 5 times greater than its full-session average, according to the Heat Seeker.

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