Shipping giant Nordic American Tankers (NAT) is up 45 percent over the past year, more than double the return of the S&P 500. One trader is betting shares will continue higher in the coming weeks.
That’s based on the March 15 $4.50 calls. With 49 days until expiration, 4,965 contracts traded compared to a prior open interest of 155, for a 32-fold rise in volume on the trade. The buyer of the calls paid $0.27 to make the bullish bet.
Nordic shares recently traded for about $4.25. They would need to rise $0.25, or about 6 percent, for the option to move in-the-money.
The strike price is just under the stock’s 52-week high of $4.83, set back in October.
Shares have been in an uptrend over the past year with considerable volatility. The stock has sold off notably in recent sessions.
Action to take: Shares appear to be in a downtrend now, and may get closer to the $4 range in the coming weeks before heading higher. Nordic does pay a dividend with a yield of about 5.6 percent right now.
For traders, the March calls could get a bit cheaper in the next few days, but would likely jump higher on a move higher for shares. Nordic may also see a jump at the end of February when it next reports earnings.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.