Shares of oil and gas exploration company Comstock Resources (CRK) have soared 256 percent in the past year. One trader is betting on a further rally higher for the energy company.
That’s based on the September $22 calls. With 98 days until expiration, 10,096 contracts traded compared to a prior open interest of 154, for a 66-fold jump in volume on the trade. The buyer of the calls paid $2.83 to get into the trade.
Shares last traded just over $21, so they’d need to rise about 4 percent for the option to move in-the-money. The stock also has a 52-week high of just over $22, so shares would be breaking to a new all-time high if this trade plays out.
The exploration company has lost money overall in the past year, but has seen revenues rise 54 percent. The company just barely made a profit in its most recent quarter, but shares will mostly trade based on changes in oil and natural gas prices.
Action to take: Shares could potentially move substantially higher in the coming months. Energy prices don’t seem to have peaked quite yet, and analysts are raising their price targets on oil and natural gas. The stock does not currently pay a dividend.
For traders, the option has time to play out over the summer driving season, which may drive prices up further. Supply is tight relative to demand in the energy space. Traders in the September calls could see mid-to-high double-digit gains.
Disclosure: The author of this article has no position in the company mentioned here, but may further trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.