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TheStreet Open House

Energy Bulls Clean Up in Anadarko

By David Russell of OptionMonster

NEW YORK -- Anadarko Petroleum (APC) exploded higher Thursday, and traders made a killing from the move.

On Monday, the embattled oil driller was recommended on OptionMonster's Market Action Webinar. Then our Heat Seeker tracking system detected highly bullish option activity the next day, with 10,000 April 90 calls bought for about 50 cents.

The stock moved sideways on Wednesday but surged as much as 16% Thursday after the company announced that it would settle an environmental lawsuit for $5.15 billion. That removed uncertainty from Anadarko, allowing it to participate in a broader rally that's been taking shape in the energy sector.

While impressive, the move in the share price was nothing compared with profits of more than 1,300% reaped by holders of those April 90 long calls. Other traders rolled winning positions higher in May calls, selling the 95s for $4.20 and buying the 105s for $2.

Yet another investor opened a bullish call spread. This trader waited for a pullback, then bought the May 105s for $1.22 and sold the May 115 calls for 10 cents.. That position will earn 793% on a move to $115 or higher.

Overall option volume was 14 times greater than average in the name Thursday. Calls accounted for a bullish 92% of that total.

Anadarko shares ended Thursday up 14.51% to a record closing high of $99.02. At one point in the session the stock touched $100 for the first time ever.

Russell has no positions in APC.

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.

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