Pipeline company Enbridge Energy Partners is drawing bullish option activity.
OptionMonster's tracking programs Friday showed the purchase of about 2,800 December 27.50 calls, most of which priced for $0.85. Volume was more than 50 times open interest at the strike, indicating that new positions were initiated.
Those calls lock in $27.50 as the purchase price on Enbridge shares in the next five weeks, no matter how high the stock goes. That will provide significant leverage in the event of a rally, but the contracts will lose all their value from even a modest decline.
Enbridge shares rose 2.36 percent to $28.25 on Friday and is trying to build support around the same $27.50 area where it bounced in June. The stock had peaked above $30 earlier this month.
Total option volume in the name was five times greater than average in the session, with calls outnumbering puts by a bullish 32 to 1.
—By CNBC Contributor David Russell
Options Trading School:
David Russell is a reporter and writer for OptionMonster. Russell has no positions in EEP.