OptionMonster's tracking systems show that 10,000 December 37.50 calls were bought in a four-minute span, dominated by two prints of 6,799 and 2,500 that went for 36 cents. Open interest in the strike was just 377 contracts before the trades appeared, indicating that this is new positioning.
These long calls lock in the price where the stock can be purchased through mid-December no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, providing potentially significant leverage, but the contracts will expire worthless if shares remain below $37.50.
Kinder Morgan slipped 0.21% to $33.25 Tuesday. The energy-pipeline operator has been trapped in a range between $32 and $34 since late March.
The company reported mixed results in its last quarterly report on April 16 while raising its dividend. Kinder Morgan also saw bullish September call action on May 7.
Total option volume the name surpassed 23,000 contracts Tuesday, six times its daily average for the last month. Overall calls outnumbered puts by a bullish 18-to-1 ratio.
Yamamoto has no positions in KMI.