Shares of oil and gas exploration company Antero Resources Corporation (AR) are up over 240 percent in the past year. One trader sees a further rally in the months ahead.
That’s based on the November $45 calls. With 197 days until expiration, 26,695 contracts traded compared to a prior open interest of 550, for a 49-fold rise in volume on the trade. The buyer of the calls paid $4.80 to make the bet.
The stock recently traded for around $37, so shares would need to rise about $8, or 22 percent, for the option to move in-the-money. Shares are at a 52-week high, but are well off the peak price set in 2014.
Earnings are up over 1,190 percent in the past year, and revenue is up 87 percent. The company is nearing profitability, and going for about 7 times forward earnings.
Action to take: As long as oil prices stay here or even continue higher, this play should continue to rise in value. As an early-stage exploration company, shares don’t pay a dividend, so investors interested in income from the energy space need to look elsewhere.
For traders, the November options should play out well given rising demand for gasoline during the summer driving season in North America. Traders can likely see a high double-digit return on the option trade.
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 of the companies mentioned in this article.