Unusual Options Activity: Conoco Phillips (COP)

Oil and gas major Conoco Phillips (COP) is up 17% over the past year. One trader sees further upside in the months ahead.

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  • That’s based on the June $155 calls. With 79 days until expiration, 11,528 contracts traded compared to a prior open interest of 129, for an 89-fold rise in volume on the trade. The buyer of the calls paid $0.27 to make the bullish bet.

    Conoco shares recently traded for about $129. Shares would need to rise another $26, or just over 20%, for the options to move in-the-money. Conoco is right at its 52-week high and trending higher.

    The oil producer has struggled in the past year, with oil prices spending most of the year under $70. Earnings are down by 7%, and revenues are off by 20%.

    Even with that headwind, prices are starting to trend higher. And Conoco only trades at about 14 times forward earnings, still making it an inexpensive stock relative to the overall market.

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  • Action to take: Investors may like shares at current prices, given their uptrend and the likelihood of further gains in the months ahead.

    At current prices, Conoco pays a 2.8% dividend.

    For traders, the June calls are inexpensive enough that even if shares trend slowly higher, they can still see high double-digit returns.


    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.

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