NEW YORK -- Boardwalk Pipeline Partners ( BWP) has gotten hammered along with most other energy-related names, but one big player is looking for a rebound.
OptionMonster's Heat Seeker programs Monday detected the sale of 15,000 January 16 calls for 75 cents and the purchase of 15,000 June 17 calls for $1.80. Volume was below previous open interest in the nearer-term contracts but above it in the later options, indicating that a long-call position was rolled to a higher strike five months ahead.
The new long calls lock in the price where the stock can be purchased through mid-June 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 $17.
BWP ended the session down 4% to $15.84. The natural-gas pipeline operator was above $17 before the Organization of Petroleum Exporting Countries decided not to cut oil production last Thursday, a decision that sent the entire energy sector lower.
Overall option volume in the name was more than 100 times its daily average for the last month, with calls accounting for a bullish 95% of the total.-- Written by Mike Yamamoto of OptionMonster
Yamamoto has no positions in BWP.