Call-Buyers Go Back to McDermott Well

By Pete Najarian, co-founder of OptionMonster

NEW YORK ( OptionMonster) -- The bulls piled into McDermott ( MDR) Wednesday for the second time in three days.

Traders were buying the November 13 calls, paying $1.25 to $1.30 shortly after the open. Those premiums shot as high as $2.10 toward the end of the session, according to OptionMonster's real-time tracking systems.

McDermott, which builds and manages complex offshore oil and gas projects, started the week at a fresh 52-week low but is up 26% since then. On Wednesday, the stock rose 14.79% to close at $13.35 as the price of oil surged, one day after trading all the way down to about $10.

More than 14,000 calls changed hands against fewer than 2,500 puts. And those puts that did change hands were mostly sold, indicating that traders saw a floor beneath the shares. Overall on the day, volume was almost quadruple the McDermott's daily average.

On Monday, the bulls were focused mostly on the November 10 strike but were also purchasing the November 13 and October 13 calls. The stock moved in a hurry after that buying, causing some of the options to double in value in just a few hours.

Najarian owns MDR shares.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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