Unusual Options Activity: Halliburton Company (HAL)

Shares of oil and gas equipment giant Halliburton Company (HAL) have been trending higher with the price of oil over the past few months. One trader sees the potential for a big jump higher in the coming months.

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  • That’s based on the September $28 calls. Expiring in 74 days, over 46,640 contracts recently traded, a massive 259-fold jump in volume from the prior open interest of 180 contracts.

    The buyer of the call options paid about $0.70 to make the trade. With shares just under $24, they’d need to rally nearly 20 percent to move in-the-money by expiration. That would also entail shares breaking past their prior 52-week high.

    Halliburton has already beaten the S&P 500 with an 89 percent rally in the past year, coming right off of oil’s big drop and subsequent recovery. While the company is not yet profitable, it’s trending that way with a rebound in demand for oil and gas exploration.

    Action to take: This is an inexpensive way to bet on higher prices in oil over the summer. Some traders see oil moving back to $100 per barrel. While many companies have cut back on exploration and production, they still need services and equipment provided by Halliburton.

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  • Shares yield 0.8 percent, and may be of interest for investors, although there are higher yields in other energy stocks. Traders should go for the option instead, and look for high double to low-triple digit profits.

     

    Disclosure: The author of this article has no position in the company mentioned here, and does not intend to make a trade in this company after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.