Oil and gas midstream firm EnLink Midstream (ENLC) have risen over 30 percent since their May lows. One trader sees shares continuing higher in the coming weeks.
That’s based on the September $12 calls. With 52 days until expiration, 13,412 contracts traded compared to a prior open interest of 579, for a 23-fold rise in volume on the trade. The buyer of the calls paid $0.35 to make the bullish bet.
Shares recently traded for about $11.50, so they would need to rise less than 5 percent for the option to move in-the-money. EnLink started the year trading at about $12 and have a 52-week high of $13.58.
Flatlining energy prices over the past year have led to a decline in overall revenue, and a drop in profit margins to just 5 percent, but EnLink has managed to increase earnings.
Action to take: EnLink shares are in an uptrend that look likely to continue. And the energy company yields about 4.4 percent at current prices.
The payout will likely fluctuate with energy prices and production, but should likely trend higher in the months ahead, as energy prices are on the lower end of their trading range and likely to head higher.
For traders, the September $12 calls are well positioned to take advantage of the current uptrend, and are inexpensive enough to see mid-to-high double-digit growth.
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 of the companies mentioned in this article.