FTO – Frontier Oil Corporation – Shares of the independent energy company engaged in crude oil refining and wholesale marketing of refined petroleum products are up nearly 3.25% to $14.38 this afternoon. The rally in the price of the underlying stock inspired bullish options traders to purchase out-of-the-money call options in the August contract. Investors expecting to see continued appreciation in the price of Frontier’s shares in the next couple of months looked to the August $15 strike to pick up roughly 1,700 calls at an average premium of $0.66 apiece. Call buyers at this strike price make money if FTO’s shares surge 8.90% over the current price of $14.38 to trade above the average breakeven point to the upside at $15.66 by August expiration. Frontier Oil Corp.’s shares last traded above $15.66 on May 13, 2010, when the stock touched an intraday high of $15.70.
Affiliation: Interactive Brokers
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.
Interactive Brokers: Interactive Brokers offers direct market access to around 80 electronic global markets from a single account. Successful traders and investors understand that superior technology and lower trading costs can result in greater returns. For 32 years we have been building direct access trading technology that delivers real advantages to professionals worldwide. With consolidated equity capital of US $4.4 billion, IB and its affiliates exceed 1,000,000 trades per day. In addition, our prudent and conservative risk policies make Interactive Brokers a safe haven for your money. Discover some of the reasons why IB, the largest independent US broker/dealer, is the professional traders' and investors' choice.
Visit: Interactive Brokers