Kinder Morgan Bulls Look for a Breakout

A pipeline at the Federal Strategic Petroleum Reserve in Beaumont, Texas.
Joe Raedle | Getty Images
A pipeline at the Federal Strategic Petroleum Reserve in Beaumont, Texas.

Energy pipelines have been a favorite of the bulls, and now they're looking for Kinder Morgan to break out.

OptionMonster's monitoring systems detected the purchase of more than 5,700 December 45 calls on Friday, most of which priced for $0.48 and $0.49. The volume was more than more than five times the previous open interest at the strike, indicating that new positions were initiated.

The calls lock in the price where shares can be bought in the energy-transportation company. Because of their cheap entry price, the contracts can generate significant leverage if the stock keeps climbing, but limits the amount of money that can be lost if it drops.

Kinder Morgan rose 1.4 percent to a new all-time closing high of $40.48 on Friday after testing previous peaks from 2012 in earlier sessions. The call buyers are clearly looking for a breakout to new record highs.

Overall calls at all strikes outnumbered puts by more than 4-to-1 in the session, and total option volume was twice its daily average in the last month.

—By CNBC Contributor David Russell

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Disclosures:

David Russell is a reporter and writer for OptionMonster. Russell has no positions in KMI.

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