By Mike Yamamoto of OptionMonster

NEW YORK -- Option traders turned bullish on Spectra Energy (SE - Get Report) late Thursday.

More than 8,800 September 46 calls traded for 20 cents to 40 cents with less than an hour left in the session, according to OptionMonster's tracking systems. These are clearly new positions, as open interest in the strike was a mere four contracts before the trades appeared.

Another 4,800 August 44 calls changed hands for 30 cents to 60 cents at the same time. This was also new positioning, as previous open interest in that strike was just one contract.

These long calls lock in the price where the stock can be purchased no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before expiration, providing potentially significant leverage, but the contracts can quickly lose value if shares stall or decline.

Spectra's stock was up 0.23% Thursday to close at $42.66, just off its all-time high of $42.72 reached on July 1. The natural-gas and oil pipeline company reports second-quarter results on the morning of Aug. 6.

Total option volume in Spectra topped 19,000 Thursday, 14 times its daily average for the last month. Only 235 of those contracts were puts, a reflection of the session's bullish sentiment.

Yamamoto has no positions in SE.


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.