As oil prices bounced on Thursday from the year's steep losses, one options trader is betting on a big rally for one of energy's most beleaguered names.
On Thursday, Marathon Oil surged 11 percent off a 4 percent jump in crude oil. According to Andrew Keene of AlphaShark, the reversal in crude oil should boost the company's shares even further in the next couple of months.
"I don't think the company has that many bad problems. The only thing that's happening is that oil is going lower," Keene said on CNBC's "Trading Nation" Thursday.
Over the past year, Marathon Oil shares have tumbled 67 percent amid the collapse in crude oil prices. From a technical standpoint, Keene said the downtrend in Marathon Oil has been broken in the last two days, which points to a substantial move higher.
"We've finally seen a reversal in oil. We have two straight days where we have the close higher than the open, that's very, very bullish," Keene said.
Keene is targeting a move to $12, which would be a 37 percent gain from its closing price on Thursday.
But instead of buying the stock outright, Keene is using an options play to limit his losses, should his thesis prove wrong.
To make his bullish bet, Keene is buying the April 11-strike call and simultaneously selling the April 12-strike call for a total of 25 cents per share, in an options strategy known as a "bull call spread."
The trade is profitable if Marathon Oil's stock rises above $11.25 by April expiration. If the stock rises to $12, Keene's 25-cent purchase will be worth $1, for a 300 percent return. Conversely, if Marathon fails to make the expected move, his loss will be limited to the option premium paid.