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Spectra Energy draws bullish play

David Russell (david.russell@optionmonster.com)

For at least the second time this month, the bulls are getting long Spectra Energy.

optionMONSTER's Heat Seeker monitoring program detected heavy call volume in the pipeline company on April 10 , with the January 40s purchased for $1.15 and the September 41s trading for $0.55. SE has ground higher since and those contracts have gained slightly.

Yesterday they returned with a stock-replacement strategy in May, buying the 40 calls for about $0.30 and selling the 38 puts for $0.26. Some 1,500 contracts traded at each strike, well above previous open interest.

The new position will track movements in the share price, profiting to the upside and losing money to the downside. Its advantage is that it cost just $0.04 up front and will only perform if big move occurs. Otherwise, both halves of the trade will expire worthless. (See our Education section for more on long calls and short puts .)

SE rose 0.2 percent to $39.42 yesterday and has been trending higher since December. The company also reports earnings on May 7, before yesterday's options expire.

More than 4,700 contracts traded in the session overall, more than triple daily average for the last month.

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