CXO – Concho Resources, Inc. – Shares of the independent oil and natural gas company jumped more than 11.4% during the session to touch an intraday high of $57.86, which is just $1.86 less than the stock’s current 52-week high of $59.72 attained back on May 3, 2010. The surge in the price of the underlying stock attracted bullish options investors to the June and July contracts. Near-term optimists hoping to see Concho’s shares surpass the current high for the past year picked up 1,600 calls at the June $60 strike for an average premium of $1.25 each. Call buyers at this strike price make money if CXO’s shares increase another 5.85% to surpass the average breakeven price on the calls at $61.25 by June expiration. Bullish players expecting a less dramatic move in share price bought 1,000 now in-the-money calls at the July $55 strike for an average premium of $3.61 apiece. Traders long the in-the-money contracts stand ready to profit if the oil and gas company’s shares exceed $58.61 through July expiration.
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Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
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