NEW YORK -- Occidental Petroleum
(OXY) attracted bullish option activity Tuesday for the second time in less than a week.
Last Thursday the energy company saw a huge roll from the April 95 calls to the August 105 strike, doubling the size of the position to 36,000 contracts. Tuesday traders returned to the name, buying more than 5,000 June 105 calls for 51 cents to 69 cents in volume that dwarfed the strike's previous open interest of just 84 contracts, according to OptionMonster's tracking systems.
These long calls lock in the price where the stock can be purchased no matter how far it might climb. They could provide significant leverage and be sold at a profit if premiums rise with a rally, but the contracts will expire worthless if shares remain below $105 through expiration.
Occidental shares fell 0.53% to $96.93 on Tuesday, continuing to trade in a range that has been in place for more than a year. The oil and gas producer is scheduled to announced first-quarter results on the morning of May 5.
Total option volume in the name topped 22,000 contracts Tuesday, almost double its daily average for the last month. Overall calls outnumbered puts by nearly 6 to 1, a reflection of the session's bullish sentiment.
Najarian has no positions in OXY.