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Call buyers discover PBF Energy

David Russell (david.russell@optionmonster.com)

The bulls have discovered PBF Energy, an oil refiner that went public a little more than a year ago.

optionMONSTER's Heat Seeker monitoring program detected the purchase of more than 3,000 September 30 calls for $1.80. Open interest stood at just 96 contracts when the session began, so new money is clearly being put to work.

Long calls lock in the price where a stock can be purchased through mid-September no matter how far it might climb. Investors buy them rather than the shares to profit from a rally but with much less risk and the potential for significant leverage, but the contracts will expire worthless if they remain below the strike price. (See our Education section)

PBF is unchanged on the session at $27.18 in midday trading. The company priced its initial public offering at $26 in December 2012, shot over $42 by early 2013, and then crashed along with other refiners into last summer. The stock has been consolidating above its 200-day moving average for most of March, which could lead some chart watchers to expect a move higher.

Total option volume in the name is more than 9 times greater than average in the name, with not a single put trading so far.

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