Energy Bulls Turn to Kodiak Oil

Jim Seida | NBC News

Kodiak Oil & Gas is seeing bullish option activity ahead of its earnings report next week.

OptionMonster's trade scanners detected a strong buying pattern in the May 7 calls yesterday as premiums rose from $0.75 to $0.90. More than 3,200 of those contracts changed hands in volume well above the strike's previous open interest of just 671 contracts, a sign that new money was put to work.

These calls lock in a $7 purchase price for shares in the Denver-based company, so they can generate significant leverage if it rallies by expiration in mid-May. The contracts will closely track the stock price because they are already in the money and will rapidly lose value if the shares drop.

Kodiak rose 1.32 percent to $7.66 yesterday, closing just below its 10-day moving average. Shares have been trending steadily lower since hitting a recent high of $9.65 in mid-March but may have found support in recent days.

Total option volume in the name yesterday was more than twice its daily average in the last month. Calls outnumbered puts by a bullish 12-to-1 ratio.

—By CNBC Contributor David Russell

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Mike Yamamoto is the managing editor of OptionMonster. Yamamoto has no positions in KOG.