Call Buyers See Frontier Oil Going Higher

By Jon "DRJ" Najarian, co-founder of OptionMonster

NEW YORK (TheStreet) -- Frontier Oil (FTO Quote) shares have been range-bound for months, but options are looking for the stock to break higher by this fall.

Average daily volume of Frontier oil calls has been just 830 contracts in the last 20 sessions, but OptionMonster's tracking systems saw 15,575 change hands Friday. The biggest buying was at the October 15 strike, in which 11,095 calls traded.

Almost all of the calls went for 35 cents and 40 cents on the offer, representing a cheap shot for a recovery in this oil refiner. Also on Friday, Frontier's board declared a regular quarterly cash dividend of 6 cents a share.

Frontier Oil ended last week at $13.40 after rising slightly Friday and inched up another nickel in after-hours trading. For the calls purchased Friday to turn a profit, the stock would need to rise at least 15% to $15.35 by the time the options expire in October.

With the exception of a short-lived spike past $18 at the beginning of June, the stock has been stuck between $12 to $16 all year and has seen resistance around $14 for the last three months. Those levels are roughly double the 52-week lows of last November, but are still well short of the $23 highs of a year ago.