Just Tuesday, OptionMonster's tracking systems detected heavy call buying in the August 115 calls for 62 cents to 86 cents as investors positioned for upside in the oil and gas producer. They didn't have to wait long because APC rallied this morning, and those calls fetched as much as $3.35, as OptionMonster co-founders Jon and Pete Najarian just noted on CNBC's "Halftime Report."
New positions were also opened. Almost 13,000 June 115 calls were bought Wednesday for 60 cents to $1.15, along with 8,500 August 115 calls for $1.55 to $3.30.
Long calls lock in the price where a stock can be purchased no matter how far it might rise, allowing traders to cheaply position for gains. The contracts can quickly lose value if shares pull back, but they can also provide significant upside leverage in a rally, as was the case in Anadarko.
The stock has been on a tear since early April, when management settled an environmental lawsuit for the minimum expected cost. Our systems also flagged that move, and subscribers took home profits in excess of 1,000%. (Other huge winners recently include Allergan (AGN) and Hillshire Brands (HSH).)
Anadarko shares were up 3.38% to $107.43 in afternoon trading and at one point were up nearly 5% in the session. Wednesday's move comes amid gains in the broader energy sector and rumors that Exxon Mobil (XOM) is considering a bid for the company's Eagle Ford Shale assets.
Total option volume in the name was 7 times greater than average so far in the session, with overall calls outnumbering puts by more than 8 to 1.
Pete Najarian owns APC calls.
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