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What's behind spike in BP call volume

Chris McKhann (chris.mckhann@optionmonster.com)

BP saw a huge surge in call activity on Friday, but it's not entirely clear why.

optionMONSTER systems show that 30,000 April 44 calls traded for $1.06 on a tight bid/ask spread. The volume was above the open interest in the strike at the beginning of the session, so this is a new position.

Three minutes later, an enormous block of 1.29 million BP shares changed hands for $43.3033. The price compares to prints immediately before and after for $43.47, indicating that the stock was sold.

The calls could have been bought along with the short sale of stock as a volatility play that is looking for BP to move sharply in either direction. Or the trader may simply be replacing a long stock position with long calls to lessen risk, perhaps thinking that the market is due for a pullback. (See our Education section)

BP was up a penny on Friday to close at $43.17. The energy giant has tested resistance at $45 in late January, hitting its highest level since the start of April.

Just under 65,000 BP options changed hands on Friday, nearly triple its daily average in the last month. Calls outnumbered puts by 6 to 1.

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