Unusual Options Activity: Northern Oil & Gas (NOG)

Shares of energy producer Northern Oil & Gas (NOG) have been moving higher over the past year. Shares trended down over the summer, but are now starting to move higher, and one trader sees that rally continuing.

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  • That’s based on the March $20 calls. With 192 days until expiration, over 2,645 contracts traded against a prior open interest of 131, for a 20-fold rise in volume. The buyer of the calls paid about $2.10 to make the trade.

    Shares are currently in the $17 range, but have traded in the $21 range in early June before selling off, so the strike price is a reasonable one for where the company has traded.

    The stock is already up 175 percent over the past year. A rebound in energy prices and a low valuation make shares look attractive here, with the stock trading at 6 times forward earnings.

    Action to take: The company just raised its annual dividend from $0.03 to $0.16, a six-fold jump. While that’s just a 1.1 percent yield at today’s prices, further dividend payouts could be likely in the years ahead for those who buy now.

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  • For traders, the short-term trend has resumed to the upside, making this option trade a reasonable one based on the strike price and amount of time left on the option. It’s got the potential to return triple-digit moves, although traders may want to take a profit at the first sign the uptrend in shares or the energy market is ending.


    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.

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