Unusual Options Activity: NOV Inc (NOV)

Shares of oil and gas equipment company NOV (NOV) have been generally heading higher over the past year, with a number of healthy pullbacks along the way. However, one trader sees the possibility for another move higher in the next few months.

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  • That’s based on the November $14 calls. With 102 days until expiration, over 10,450 contracts traded against an open interest of 148, for a 71-fold rise in volume. The buyer of the calls paid about $1.13 to make the trade.

    With shares just over $13, shares will need to rise less than 5 percent in order for the trade to move in-the-money. Shares of the company have traded as high as $18 in the past year. NOV has rallied nearly 8 percent in the past year, far underperforming the S&P 500. However, shares have been trending higher thanks to rising prices for oil.

    Action to take: Oil prices have been weak in recent weeks thanks to an OPEC+ deal and inventory data. That looks dour, but the commodity could certainly rebound. Investors may like shares here, looking to grab double-digit gains on a move higher in oil.

    For traders, the option is attractively priced, and could yield potential triple-digit profits. However, if oil continues to move down, which it sometimes does going into the autumn and winter, traders could find the option expire worthless, so look to take quick profits or cut losses quickly on this trade.

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    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.