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How bull is playing Resolute Energy

David Russell (david.russell@optionmonster.com)

Resolute Energy has made a giant move, and one investor is using options to ride the rally.

Our Heat Seeker monitoring system detected a surge of call volume in the Denver oil driller. Some 8,304 April 7.50 calls were sold for $4, while an equal number of April 10 calls were bought for $1.65. Volume was below open interest in the 7.50s, which suggests that an existing long position was closed and rolled to the higher strike.

The trader probably had made big profits in the 7.50 calls and wanted to protect those gains. Adjusting the strategy let him or her collect $2.35 of income while staying in the game if REN continues to advance. The April 10 calls have a delta of 0.90, so will track the share price on an almost-dollar-for-dollar basis. (See our Education section for more on option " greeks .")

REN closed at $11.35 on Friday, up 0.71 percent in the session. It has gained more than 35 percent so far in 2013, with most of that move occurring after the company announced on Feb. 25 that production would increase by more than 30 percent this year. Management credited investments at its Aneth field in Utah.

Total option volume was 13 times greater than average in Friday's session, with calls outnumbering puts by more than 1,000 to 1.

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