Natural Gas Bulls Turn to Questar

By David Russell, reporter at OptionMonster

NEW YORK -- First it was Williams (WMB), and now the natural-gas bulls are looking to Questar (STR).

OptionMonster's tracking programs detected heavy buying in the April 22 calls about halfway through Friday afternoon, with some 2,000 contracts initially bought for 25 cents. 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.

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 35 cents by the end of the session, a gain of about 40% versus a much smaller move in the share price.

Questar, which focuses on pipelines and storage in the western United States, closed the session up 2.34% to $20.97. Earlier in the week, its much larger peer Williams 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 Questar was 15 times greater than average in the session. Calls outnumbered puts by a bullish 112 to 1.

Russell has no positions in STR or WMB.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.