By Jud Pyle, CFA, chief investment strategist for the Options News Network
Looking at the July 45 calls in
, we find that they have traded more than 5,000 times so far today vs. current open interest of 2,455.
We also find that the July 55 calls have traded more than 5,000 times vs. an open interest of 1,033. What is interesting about this call activity is that it was a bullish call spread and it gives one picture into a way to take advantage of potential upside in FLR.
FLR reached a 52-week low on Nov. 21 of $28.60. Now today, with the stock having rallied back up to around $37.90, an investor purchased the July 45-55 call spread for around $2.25. That means that the investor bought the 45 calls and sold the 55 calls. If FLR is above 55 at July expiration, the investor will attain the max profit of $7.75.
Fluor is in the business of providing construction for oil pipelines. As the price of oil has stabilized and begun to rally, FLR has moved higher with it. What is notable about this call spread is that by purchasing a spread rather than just the 45 calls, the investor gets to spend less in return for capping his or her upside.
This bullish activity in FLR is similar to other bullish activity that we have seen in
in the past few weeks. After seeing their shares decline precipitously since last summer, many companies that profit from the energy and base material sector have started to stabilize and see some bullish trends in their shares.
Jud Pyle is the chief investment strategist for Options News Network (www.ONN.tv) and the portfolio manager of TheStreet.com Options Alerts. Click here for a free trial for Options Alerts. Mr. Pyle writes regularly about options investing for TheStreet.com.
Jud Pyle, CFA, is the chief investment strategist for Options News Network. Pyle started his career in finance in 1994 as a derivative analyst with SBC Warburg. After four years with Warburg, Pyle joined PEAK6 Investments, L.P., in 1998 as an equity options trader and as chief risk officer. A native of Minneapolis, Pyle received his bachelor's degree in economics and history from Colgate University in 1994. As a trader, Pyle traded on average over 5,000 contracts per day, and over 1.2 million contracts per year. He also built the stock group for all PEAK6 Investments, L.P. hedging, which currently trades on average over 5 million shares per day, and over 1 billion shares per year. Further, from 2004-06, he managed the trading and risk management for PEAK6 Investments L.P.'s lead market-maker operation on the former PCX exchange, which traded more than 10,000 contracts per day. Pyle is the "Mad About Options" resident expert. He is also a regular contributor to "Options Physics."