Trader bets on this refiner

Crude oil's nearly 45 percent plunge in the past 12 months has made energy stocks the worst-performing sector in the same period, falling nearly 20 percent. But as crude has soared off its lows, some traders are betting big on one name in particular.

"Energy stocks have actually been the most volatile stocks in the S&P 500 over the course of the past 30 days and the options market is implying that it will be the most volatile sector in the next 30 days as well," Mike Khouw, options expert and CNBC contributor, said Wednesday on CNBC's "Fast Money."

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And according to Khouw, there was one name that stuck out in the options market this week: Valero. On Wednesday, when options call volume traded two times its average, a large institutional player bet that the stock could see a short-term rally into the end of the week. Specifically, that trader purchased the June weekly 58-strike calls paying an average price of 50 cents each. Since buying a call option allows a trader to purchase a stock at given price for a set time, this trade is profitable if Valero is above $58.50 by Friday.

Valero shares are up more than 16 percent year to date, but since the initial surge in from mid-January to late February, the stock has moved in a tight range. In the past three months "Valero has moved an average of 1.5 percent," said Khouw. "It appears that this options trader is trying to make a limited-risk bet for a short-term rally.

If the trade were to become profitable, that would mean 2 percent rally for Valero in the next two trading sessions.

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    Melissa Lee is the host of CNBC's “Fast Money” and “Options Action.”

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