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Natural-gas bulls turning to Questar

David Russell (david.russell@optionmonster.com)

First it was Williams, and now the natural-gas bulls are looking to Questar.

optionMONSTER's Heat Seeker tracking program detected heavy buying in the April 22 calls about halfway through Friday afternoon, with some 2,000 contracts initially bought for $0.25. Traders continued to pile in later in the session, pushing total volume to 3,964 at the strike--almost triple the previous open interest, indicating that this was new activity.

Long calls lock in the price where investors can purchase stock, so they can generate some nice leverage if the shares rally. That's exactly what happened on Friday as those calls inflated to $0.35 by the end of the session, a gain of about 40 percent versus a much smaller move in the share price. (See our Education section)

STR, which focuses on pipelines and storage in the western United States, closed the session up 2.34 percent to $20.97. Earlier in the week, its much larger peer WMB saw heavy activity in the August contracts as an investor looked to generate big leverage from a steady gain in the share price.

Total option volume in STR was 15 times greater than average in the session. Calls outnumbered puts by a bullish 112 to 1.

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

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