Traders are betting that Kinder Morgan will continue its recent recovery.
optionMONSTER's Heat Seeker tracking program detected the heavy buying in the February 18 calls, with more than 8,000 trading for $0.21 to $0.35 today. Open interest in the strike was only 718 contracts before the session began, indicating that new money was put to work.
Long calls lock in the price where investors can buy stock, allowing them to profit from a rally with limited capital at risk. Their cheap cost can also generate significant leverage on a percentage basis if shares move in the right direction.(See our Coaching section)
KMI is up 7.26 percent to $16.40 heading into the final hour of trade today. The energy-pipeline operator is down 44 percent in the last three months but has been rebounding since reporting bullish quarterly results on Jan. 20.
Overall option volume was twice the daily average, according to Heat Seeker. Calls outnumbered puts by a bullish 3-to-1 ratio.
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