NEW YORK -- Linn Energy
(LINE) reports earnings this week, and traders are already taking a long-term bullish view on the name.
About 3,900 January 25 calls were bought on Friday, most of them priced at $3.70 and $3.90, according to OptionMonster's monitoring systems. The volume was well above the strike's previous open interest of 1,289 contracts, indicating that new positions were initiated.
Long calls lock in the price where a stock can be purchased, allowing investors to position for a rally with much less capital than they would need to buy shares up front. The contracts can provide significant leverage on a move higher but will lose value if the stock drops.
Linn's shares fell 0.83% to $28.56 on Friday. The stock gapped down from the $33 level with the company's last earnings report in late February and continued to decline throughout March. It has been trading sideways for the last month.
The oil and natural-gas producer is scheduled to release quarterly results on Thursday before the opening bell.
Overall option volume in Linn topped 7,300 contracts on Friday, double its daily average for the last month. Total calls outpaced puts by a bullish 5-to-1 ratio.
Russell has no positions in LINE.
Check Out Our Best Services for Investors
Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts