Options Brief: Frontier Oil (FTO)

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.

About Andrew Wilkinson 1023 Articles

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.

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