Option activity heated up in the energy sector yesterday, and GMX Resources was a key upside target.
Yesterday traders stepped in to buy 6,000 November 2 callsfor prices ranging from $0.55 to $0.75 against previous open interest of just 169 contracts, according to optionMONSTER's Heat Seeker system. The calls will appreciate more rapidly than the stock if GMX rallies.
The stock ended the day down 0.45 percent at $2.20, but it was up as much as 14 percent earlier in the session. The shares had been trading above $5 in late July.
GMX has quarterly earnings growth of more than 40 percent, well above the industry average of 15.5 percent, but it has had trouble persuading investors to believe it in. Debt is high and short interest is in the double digits.
The company's next earnings release is scheduled for Nov. 7, 11 days before the options expire. Overall option volume in the name was 7 times greater than average yesterday, and calls outnumbered puts by 6,270 to 435.
Another view on the energy sector: It's About Emerging Markets
—Najarian has no positions in GMXR.
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Pete Najarian is a professional investor, CNBC contributor, regular co-host of CNBC's "Fast Money" and co-founder of .