By Pete Najarian, co-founder of OptionMonster
NEW YORK -- The energy sector has been no stranger to the bulls recently and they turned to Talisman Energy (TLM) on Tuesday afternoon.
The January 14 calls started lighting up our screens during the noon hour, and traders continued to snap up those contracts throughout the rest of the day. More than 14,000 of the options had changed hands by the end of the session, nearly all of them priced for 35 cents, according to OptionMonster's tracking systems.
These calls lock in the price where shares can be purchased. Because the options cost much less than the stock itself, they can provide significant leverage on a percentage basis if the stock rallies.Talisman shares rose 4.43% to $12.01 on Tuesday. The Canadian oil and natural-gas company has been weak for a long time, and the bulls apparently think that it's time for this name to catch up with the rest of the energy space. Total option volume in Talisman was eight times greater than average in the session. More than 33,000 calls traded in the name vs. just 5,500 puts. Najarian owns TLM calls.