By David Russell of OptionMonster
NEW YORK -- Petrobras (PBR) has broken resistance, and a large trader apparently believes that the Brazilian oil giant will keep rallying.
OptionMonster's trade scanners detected a surge of volume in short-term calls as 10,556 Weekly 18s expiring on Nov. 22 were first sold for 21 cents and 20 cents, followed less than two minutes later by the purchase of an equal number of Weekly 18.50s expiring on Nov. 29 for 23 cents.
The new calls lock in the price where shares can be bought, letting investors cheaply position for a rally. Volume was below open interest in the 18s Wednesday, which suggests that an existing long position was closed and rolled higher to the 18.50s. He or she paid less than 2 cents to make the adjustment and now has an additional week to ride it higher.
Petrobras shares rose 0.89% to $17.06 Wednesday and are up 27% in the last three months. The stock lagged the broader market for years after mistreating investors with a dilutive investment in 2010, but shares have rebounded more recently as sentiment has improved toward emerging markets.
The company also received access to Brazil's huge Libra offshore oil field and raised domestic fuel prices late last month. That drove the stock above its 200-day moving average, where it has been consolidating since.
Overall option volume in the name was about average, but calls accounted for a highly bullish 95% of the total.
Russell has no positions in PBR.