Oil prices are rebounding and one trader is now making a big long-term bet that a slightly under-the-radar energy name will see gains over the years to come.
Energy infrastructure company Kinder Morgan is up 7 percent in the past month while crude bounced 32 percent higher. But over the past year, the stock climbed 29 percent even as crude prices were slashed in half. A recent transaction in the options market shows that there are traders who see Kinder Morgan's uptrend continuing.
On Thursday, volume on the stock's bullish options as eight times their average. The bulk of that was in one transaction. A trader bought 50,000 contracts of the 50-strike call options with January 2017 expiry for $1.20 each. To offset a portion of the costs, the trader simultaneously sold the same amount of the 60-strike for 20 cents each.