Major oil and gas producer
ConocoPhillips (COP) jumped over 9 percent on Monday as oil prices rallied on news of OPEC cuts. One trader sees shares continuing higher in the coming weeks.
That’s based on the April 28 $107 calls. With 23 days until expiration, 11,135 contracts traded compared to a prior open interest of 109, for a 102-fold jump in volume on the trade. The buyer of the calls paid $4.55 to make the bullish bet.
Shares last went for just over $108, meaning the option is already just over $1.00 in-the-money. Shares are still well off their 52-week high of $138.49.
While shares are now flat over the past year, higher oil prices in general have been good for the company. Revenues and earnings both grew by about 24 percent, and profit margins hit 23 percent, a high level for a commodity-producing company.
Action to take: With shares trading just over 8 times forward earnings, there’s likely more upside ahead for shares in the months ahead. Conoco currently yields about 2.3 percent.
For traders, the April calls have just a few weeks to play out, but traders can likely nab mid-double-digit gains from further upside in the stock in the coming days as a quick trade playing to the current trend higher in oil.
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.