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Bullish butterfly wings into Oil States

Chris McKhann (chris.mckhann@optionmonster.com)

Shares of Oil States International continue to rocket to new highs, and a three-way spread is looking for even more gains.

More than 20,000 OIS options have changed hands already this morning, eclipsing its daily average of just 320 contracts in the last month. Almost all of the action is in a call butterfly spread.

optionMONSTER systems show that a trader sold 10,000 December 115 calls for $2.20 and bought 5,000 each of the December 100 and 130 calls for $5.80 and $0.95 respectively. The volume was roughly twice the previous open interest at all three strikes, suggesting that the trader may be adding to an existing position.

This butterfly spread cost $2.35 to open, which is the maximum amount at risk if OIS is below $100 or above $130 at expiration. The maximum profit would be realized with the stock right at $115 at that time. (See our Education section)

OIS is up another 3.41 percent to $92.75 after reaching a new all-time high of $93.50 earlier this morning. Shares started the week around $75 and are climbing amid news that activist investment firm Jana Partners has taken a large stake in the oil and gas services company and is looking at the formation of a real-estate investment trust.

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