Bulls Come Back to Baker Hughes

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Traders have been bullish on many names in the energy sector, and upside activity in Baker Hughes lit up our screens again yesterday.

The stock closed below $40 on July 16, but ended yesterday’s session up 1.4 percent to $46.23. Shares of the company, one of the world’s largest suppliers of oilfield products and services, had been trapped in a range after dropping in April, but have broken free in the last two sessions.

More than 3,200 August 47 calls were bought in multiple blocks for about $1.20 versus previous positioning of 1,562 contracts, according to OptionMonster’s real-time tracking systems. There was also selling in the August 50 calls for $0.33, so some of yesterday’s trades were apparently part of a spread.

Buying calls locks in the amount investors must pay to buy shares, while selling calls sets the exit price. That’s a spread of $3, which cost traders about $0.87, translating into a profit of 245 percent if Baker Hughes closes at $50 or higher on expiration in less than a month.

Yesterday’s option volume in the name was seven times greater than its daily average.

—By CNBC Contributor Pete Najarian

Additional News: Global Oilfield Growth Lifts Schlumberger, Baker Hughes

Additional Views: Baker Hughes a Buy If It Pulls Back to This Level: Pros


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Pete Najarian is a professional investor, CNBC contributor, regular co-host of CNBC’s “Fast Money” and co-founder of OptionMonster.com. Najarian owns Baker Hughes calls.