Shares of oil and gas pipeline company Kinder Morgan Inc (KMI) have been rangebound over the past year, but are in an uptrend right now. One trader sees that trend continuing in the next few weeks.
That’s based on the February 11 $18 calls. With just over 30 days to trade, 24,200 contracts traded compared to a prior open interest of 180, for a 135-fold jump higher in volume. The buyer of the calls paid $0.23 to make the trade.
The company has been performing well operationally thanks to a robust energy market in the past year, but the range-bound nature of shares has led to an underperformance relative to the S&P 500.
Action to take: Shares are attractive here besides being in a short-term uptrend. The stock trades at 15 times forward earnings, and thanks to a rising dividend currently yields 6.25 percent from here.
Traders may find the best action here, as the stock has bounced around between $14 and $19 over the past year. With shares currently rising but already at $17, there’s still some upside in the coming weeks.
The February calls don’t have a lot of time on them, but are at a strike price that could lead to triple-digit returns if shares move quickly enough before expiration.
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.