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Bull comes back for more in Cabot

Mike Yamamoto (mike.yamamoto@optionmonster.com)

For the second day in a row, a large trader is moving a bullish position higher in Cabot Oil & Gas.

optionMONSTER's Heat Seeker system detected the sale of 2,846 October 38.75 calls for $1.15 and the purchase of 5,000 January 40 calls for $2.20. Volume was above previous open interest in the October options but above it in the January contracts, indicating that a position is being rolled forward to a higher strike.

The trader is apparently closing the nearer-dated position and opening the new long calls three months later. The move is particularly bullish because the investor is increasing the size of the trade while moving it to a strike that is $1.25 higher, but the calls will expire worthless if the stock remains below $40 through mid-January. (See our Education section)

On Wednesday our scanners identified a similar trade that rolled calls from the October. 38.75 strike to the October 40s.

COG fell 2.16 percent yesterday to close at $38.04. The energy company pulled back after hitting an all-time high of $40.34 on Sept. 3 but has held support at the $38 level for the last three weeks, staying above its 50-day moving average along the way.

Overall option volume in Cabot topped 15,600 contracts yesterday, almost quadruple its daily average for the last month. Overall calls outpaced puts by 5 to 1.

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