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Cheniere bulls clean up in a hurry

David Russell | Writer, OptionMonster
Friday, 6 Sep 2013 | 6:29 AM ET
Workers install a natural gas pipeline.
Justin Solomon | CNBC
Workers install a natural gas pipeline.

The bulls came back to Cheniere Energy after a long hiatus yesterday, and the move paid off almost instantly.

OptionMonster's tracking systems lit up with unusual activity in the October 34 calls late yesterday morning, with traders snapping up big chunks for $0.23. We immediately flagged the trades in our chat room and via email to our subscribers, and it was a good thing we hurried.

Barely 10 minutes later, buy orders started hitting the stock, driving it up $1 from its level when the calls appeared. Those October 34s more than doubled to $0.50 in the process.

Natural gas inventories up 96 BCF
There's a much bigger supply in natural gas storage than usually seen at this time of year, reports CNBC's Sharon Epperson.

The long calls lock in the price where shares can be purchased in the natural-gas tanker company, letting investors cheaply control moves to the upside. And that's exactly what happened yesterday.

Cheniere ended the session up 4.2 percent to $30.04. Few names have seen option activity as lucrative as Cheniere has in recent years, providing winner after winner as the stock ascended in 2011 and 2012. One trade early this year quadrupled in value by March.

More than 32,000 of those October 34 calls would change hands by the end of yesterday's session, dwarfing previous open interest of just 12 contracts. Total option volume was 20 times greater than average in the name.

—By CNBC Contributor David Russell

Additional news: Are earthquakes the result of natural gas fracking?

Additional views: Are natural gas pain about to get worse?

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Disclosures:

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

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