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Kinder Morgan bulls look for breakout

David Russell (david.russell@optionmonster.com)

Energy pipelines have been a favorite of the bulls, and now they're looking for Kinder Morgan to break out.

optionMONSTER's Heat Seeker monitoring system detected the purchase of more than 5,700 December 45 calls on Friday, most of which priced for $0.48 and $0.49. The volume was more than more than 5 times the previous open interest at the strike, indicating that new positions were initiated.

These long calls lock in the price where shares can be bought in the energy-transportation company. Because of their cheap entry price, the contracts can generate significant leverage if the stock keeps climbing but limits  the amount of money that can be lost if it drops. (See our Education section)

KMI rose 1.4 percent to a new all-time closing high of $40.48 on Friday after testing previous peaks from 2012 in earlier sessions. The call buyers are clearly looking for a breakout to new record highs.

Overall KMI calls at all strikes outnumbered puts by more than 4-to-1 in the session, and total option volume was twice its daily average in the last month.

(A version of this post appeared on InsideOptions Pro on Friday.)

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