Shares of oil and gas giant BP (BP) have slid in recent days. One trader sees the possibility for a rebound into the start of next year.
That’s based on the January 2023 $31 calls. With 210 days until expiration, 6,511 contracts traded compared to an open interest of 125, for a 52-fold rise in volume on the trade. The buyer of the calls paid $2.10 to get into the trade.
The stock recently traded around $28, so shares would need to rise about $3 for the options to move in-the-money in the coming months. That would still leave the stock well under its 52-week high of $34 per share.
Shares are up about 6 percent in the past year, while the overall stock market is currently down about 11 percent. The stock tends to trade in line with energy prices.
Action to take: The stock looks attractive following its recent decline. While not the strongest performing oil giant operationally, the company recently substantially bumped its dividend to 4.5 percent, making it ideal for income investors seeking a current high yield, and an energy play based outside the United States.
For traders, the options are an inexpensive way to bet on a rebound in shares in the coming months. Traders can likely see a mid-to-high double-digit gain before the options expire.
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.