Is Murphy Oil ready for rebound?
Murphy Oil bounced off a three-year low yesterday, and traders are looking for the rebound to continue.
optionMONSTER's Heat Seeker system shows that about 2,000 July 45 calls were bought in late in the afternoon for $0.65 to $0.80. This represents new positions, as open interest in the strike was just 303 contracts before the trades occurred.
These long calls lock in the price where the stock can be purchased through mid-July no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, providing potentially significant leverage, but the contracts will expire worthless if shares remain below $45. (See our Education section)
MUR rose 2.61 percent to $43.26 yesterday. The oil and gas producer broke below a multi-month range after reporting earnings in early May and fell to $41.78 on Monday, its lowest intraday price since June 2012.
Yesterday's overall option volume in the name was about 5 times its daily average for the last month. Total calls outnumbered puts by 50 to 1, a reflection of the session's bullish sentiment.
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