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How big trader is playing Cameron

David Russell (david.russell@optionmonster.com)

Someone is using options to spice up a slow rally in Cameron International.

Our Heat Seeker trade scanner detected the purchase of 9,150 November 50 calls for $15.10 and the sale of an equal number of May 45 calls for $18.60. Volume was below open interest in the nearer-dated contracts, indicating that an existing position was rolled forward in time and upward in strike.

Both calls are deep in the money , so the investor is using them as a replacement for shares in the oil-servicing company. The strategy lets him or her risk less about a quarter of the stock price while still providing upside exposure on an almost dollar-for-dollar basis. (See our Education section)

CAM rose fractionally to $63.46 yesterday and is up 35 percent in the last year. It's outperformed the broader energy sector for most of that time but has lagged since mid-February.

If the position hadn't been adjusted yesterday, the trader would be at risk of getting assigned shares on Friday. The strategy also yielded a credit of $3.50.

Total option volume was 21 times greater than average in the name, with calls outnumbering puts by 34 to 1.

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