Trade sees limited upside in Flotek

optionMONSTER

A large trader apparently believes that upside will be limited in energy-drilling company Flotek.

optionMONSTER systems show that 13,700 December 20 calls were bought for $2.30 yesterday in volume below previous open interest of 14,044 contracts. The same number of the March 22.50 calls were sold for $1.55 against open interest of just 863 at that strike, indicating new activity.

The trader is apparently rolling a short-call position forward, buying back the in-the-money calls in December and selling the out-of-the money calls in March. This was almost surely done against long shares in a covered-call position , which would be bullish up to the $22.50 strike price but not beyond. (See our Education section)

FTK gained 3.69 percent to $21.09 yesterday after reaching an intraday high of $21.27, its highest levels since June 2008. Shares have more than doubled from their November lows.

More than 27,000 FTK options traded in all, compared to a daily average of just 164 in the last month.


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