Bulls Come Back to Baker Hughes
"Fast Money" Contributor
Traders have been bullish on many names in the energy sector, and upside activity in Baker Hughes lit up our screens again yesterday.
The stock closed below $40 on July 16, but ended yesterday’s session up 1.4 percent to $46.23. Shares of the company, one of the world’s largest suppliers of oilfield products and services, had been trapped in a range after dropping in April, but have broken free in the last two sessions.
More than 3,200 August 47 calls were bought in multiple blocks for about $1.20 versus previous positioning of 1,562 contracts, according to OptionMonster’s real-time tracking systems. There was also selling in the August 50 calls for $0.33, so some of yesterday’s trades were apparently part of a spread.
Buying calls locks in the amount investors must pay to buy shares, while selling calls sets the exit price. That’s a spread of $3, which cost traders about $0.87, translating into a profit of 245 percent if Baker Hughes closes at $50 or higher on expiration in less than a month.
Yesterday’s option volume in the name was seven times greater than its daily average.
—By CNBC Contributor Pete Najarian
Additional News: Global Oilfield Growth Lifts Schlumberger, Baker Hughes
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