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Bulls Come Charging Back to BP

Friday, 31 Dec 2010 | 11:19 AM ET

BP saw upside option activity on volume that was nearly four times its daily average Thursday as the rest of the market slowed to a crawl.

The energy company's stock finished the session at $43.89, down 0.14 percent on the day, but rose 0.25 percent in after-hours trading. The stock price has been consolidating between $40 and $45 for the last few months, bumping up to the top of that range in early November and on several occasions in December.

More than 4,200 February 45 calls traded yesterday, almost all of them bought at prices between $1.10 and $1.30, according to OptionMonster's real-time tracking systems. The open interest at the strike was just 858 contracts, so these were clearly new positions.

For those calls to turn a profit, BP's stock must rise more than 5 percent by the time the contracts expire on Feb. 18. The company is scheduled to release its next earnings results a week earlier, on Feb. 11.

Overall option volume at all BP strikes was just shy of 40,000, which compares with a daily average of about 10,500 in the last month. Calls outnumbered puts by nearly 3 to 1.

Disclosures:

Pete Najarian does not hold significant numbers of shares in BP.

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Options Trading School:

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Other Oil Giants—Quotes:

Exxon Mobil

Chevron

Total

ConocoPhilips

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Pete Najarian is a professional investor, CNBC contributor, regular co-host of CNBC's "Fast Money" and co-founder of OptionMonster.com.

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Disclaimer

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