OptionMonster's tracking programs detected heavy buying in the September 54.50 calls on Monday, with about 5,500 contracts trading for $1.24 to $1.46. These are clearly new positions, as open interest in the strike was a mere 66 options before the session began.
Long calls lock in the price where the stock can be purchased, providing potentially significant leverage to the underlying shares. But the contracts can quickly lose value if the stock stalls or pulls back.
Valero rose 0.69% to $54.18 on Monday, continuing to hold above its 100-day moving average. The oil refiner gapped lower in June on news the U.S. government would allow limited oil exports, but the stock has rebounded in the last month.Total option volume in Valero reached 16,500 Monday, well above its daily average. Overall calls outpaced puts by 3 to 1. Russell has no positions in VLO.