BP's stock is rising on a recurring rumor that Royal Dutch Shell is set to bid on the company. And some options traders are betting the oil giant's stock is set to rise much more by the end of the week.
Short-term options on Shell were extremely hot Tuesday morning, with bullish call options expiring on Friday dominating trading. Thousands of weekly 40-strike calls, 40.5-strike calls, 41-strike calls, and 41.5-strike calls were purchased, for share prices ranging from about 25 cents to $2.
Both BP and Shell had no comment on the rumors.
The short-term nature of the trades indicates that while traders weren't willing to make long-term bets on the future of BP, options traders will willing to purchase low-priced options in order to potentially capitalize on more bullish news about the oil company through the rest of the week.
In the first three hours of trading, BP calls had already traded nearly four times their average daily volume.