By David Russell
Options action turned bullish for Sunoco today as traders bet on a rally in the next five weeks.
Call volume in the oil refiner surged 23-fold from Wednesday, according to our Heat Seeker tracking program. New money flowed into the September 27, October 27, October 29, and September 28 contracts. The stock was purchased at the same time as the calls, indicating that the trades resulted from new long positions in the calls rather than non-directional delta-neutral trades.
SUN, which rose 2.29 percent to $26.74 in afternoon trading, is up less than 2 percent in the last month. Most of the call buying occurred shortly before management made a presentation at the Barclays Capital 2009 CEO Energy Conference.
The September 27 calls traded for $0.30 to $0.70 on volume of 8,390 contracts. The October 27 calls changed hands 4,109 times, with institutional-sized transactions detected at $1.10 and $1.35.
Overall call volume in SUN exceeded put activity by more than 6 to 1, reflecting the bullish sentiment.
(Chart courtesy of tradeMONSTER)