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Late-day call buyers target Encana

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Encana drew short-term call buyers yesterday as the energy company bucked the broader-market selloff and rose sharply in late in the session.

optionMONSTER's Heat Seeker system detected heavy buying as more than 7,200 August 17 calls traded for $0.65 to $0.85, almost all of them changing hands in the afternoon. The volume was well above the strike's previous open interest of 1,000 contracts, indicating that new positions were initiated.

Traders were obviously looking for a very quick move because these long calls , which lock in the purchase price for the stock, expire at the end of today's session. (See our Education section)

ECA rose 1.25 percent to close at $17.75 yesterday. The Canadian natural-gas and oil company fell to $16.48 on July 5, its lowest price since February 2005, but has been range-bound mostly between $17 and $18 since then.

Total option volume in Encana topped 10,300 contracts yesterday, more than triple its daily average for the last month. Overall calls outnumbered puts by nearly 5 to 1.

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