By Jud Pyle, CFA, chief investment strategist for the Options News Network

Looking at the April 40 calls in ConocoPhillips ( COP), we find that they have traded more than 39,000 times so far today vs. current open interest of 2,452 for an average price of around $1.36. What is interesting about this call activity is that most of the activity is from buyers of the options.

In order for these calls to be profitable at expiration, the stock needs to be higher than $41.36, which is the strike price plus the option premium. Shares of COP are currently trading $35.20, but closed at $41.79 as recently as Feb. 19.

It is worth noting that COP was highlighted by Warren Buffett in his annual investor letter. Buffett noted that he felt COP was one of his bigger blunders in 2008, because he bought too much with oil at its peaks.

Now with oil off more than $100 from those levels, maybe this call buyer is willing to gamble that a rebound could be in the offing.

The activity in these calls has seen large blocks of both buyers and sellers of calls. But as I mentioned above, the majority of the trading was on the buy side, and that served to push up implied volatility.

Last night, the calls closed 1.15 vs. $35.13 stock. That was an implied volatility of 54.

At the time that I write this, with the stock at $35.20, the calls are marked 1.23. That is an implied volatility of 56.

Intuitively, as well, you can tell that there is more buying interest than selling because the call price has gone up 8 cents with the stock up only 7 cents at the time of this writing.

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