For at least the third time this month, the bulls are targeting Occidental Petroleum.
optionMONSTER's Heat Seeker monitoring system detected the purchase of about 10,000 May 87.50 calls for $1.19 and the sale of an equal number of May 95 calls for $0.11. Volume exceeded open interest at both strikes, indicating that new positions were initiated to create a vertical spread .
The investor now controls the $7.50 spread between the two strike prices if the stock closes at $95 or higher on expiration. The trade cost $1.08 to open and can result in a profit of 594 percent from the shares moving less than 15 percent. (See our Education section for more on how to generate leverage with options.)
OXY rose 3.49 percent to $84.20 yesterday and has been drifting sideways for the last 2-1/2 years. The option activity started turning bullish this month as traders snapped up contracts expiring in May and August . Both of those have already appreciated by more than 50 percent.
More than 60,000 OXY contracts traded in total yesterday, compared with about 13,600 in a typical session. Calls outnumbered puts by a bullish 6-to-1 ratio.
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