The price of crude oil has been dropping in recent weeks, all of 11 cents at the pump on average, according to news reports this morning. Meanwhile, Ultra Petroleum Corp. (NYSE: UPL) shares have been rising though options trading investors haven�t been too excited about the oil and gas company.
UPL is up about .33 percent to $47.38 this morning, continuing its push higher since the beginning of last week when it was down below $45. Shares of the oil and gas company were near $51 at the beginning of the month.
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OptionMONSTER’s systems show that more than 4,600 contracts have already changed hands this morning, compared to a daily average of 1,600. The action is in the UPL July 52.50 Calls, where 3,500 contracts traded against previous open interest of just 29 contracts. The calls were all sold, going for $0.80 and then $0.75, both the bid prices at those respective times.
This activity isn’t tied to any trading in the underlying stock that we see today, so it could be naked call selling. In that case it would be a bearish position looking for the shares to remain below the $52.50 strike price through expiration.
But if the calls are sold against a previously purchased stock position as a covered call, the most popular of option strategies, then the trade has a bullish bias up to that strike.
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