Oil and gas services company NextDecade Corporation (NEXT) are up about 25% in the past month on the back of earnings and a memoranda of understanding with Aramco. One trader sees shares trending higher in the weeks ahead.
That’s based on the June $9 calls. With 36 days until expiration, 5,800 contracts traded compared to a prior open interest of 101, for a 57-fold rise in volume on the trade. The buyer of the calls paid $0.45 to make the bullish bet.
NextDecade shares recently traded for about $8.40, meaning the trade is at-the-money. The strike price of the option is right under the 52-week high of $9.71, set in late March before the recent market selloff.
Oil and gas have been poorly-performing assets over the past year, which is reflected in NextDecade’s financials. The company had no earnings last year, and even lost over $180 million.
However, with contracts in place for future services, even if energy prices are lackluster, NextDecade should be able to improve its balance sheet in the quarters ahead.
Action to take: Speculative investors may like shares here, as NextDecade is a smaller play in the oil and gas space, and remains unprofitable. More conservative investors may prefer a high-yielding blue-chip stock here instead.
For traders, the June $9 calls are well-positioned for the current trend in shares, and the trade is inexpensive enough to see high double-digit returns 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 company mentioned in this article.