Bulls Can't Stay Away From Phillips 66

Phillips 66
Daniel Acker | Bloomberg | Getty Images

Option traders have been extremely active in Phillips 66 for months, and the bulls were back yesterday.

OptionMonster's monitoring programs detected heavy buying in the March 65 calls, with some 5,500 contracts trading against open interest of just 612 contracts. The first blocks priced for $0.90, but premiums then climbed to $1 as the activity heated up.

Those calls have locked in a $65 entry price on the red-hot oil refiner for the next 1-1/2 months, no matter how high the stock goes. The trader stands to generate some nice leverage in the event of a continued rally, but the contracts can also become worthless if it doesn't move.

Phillips 66 shares fell 0.31 percent to $60.57 yesterday, but is up 85 percent since getting spun off from ConocoPhillips last May. It's been climbing along with other refiners as an improving economy draws investors to the energy sector. Profit also beat expectations when the company reported earnings on Wednesday.

Total option volume was slightly above average in the name yesterday, with calls outnumbering puts by a bullish 4-to-1 ratio.

—By CNBC Contributor David Russell

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David Russell is a reporter and writer for OptionMonster. Russell has no positions in PSX.