Big bet on shares rallying through October.
On Thursday, a large bet was made on shares of Targa Resources Group (TRGP) continuing its recent rally higher.
Over 5,250 of the October $43 call options traded hands, against an open interest of 242—making for a 21-fold increase in volume. With a current share price around $40.50, this is a bet that shares will move at least 6 percent higher in the next 84 days.
- Crash Warning: Everything just changed
After 18 months of near vertical gains…the greatest bull run in history is starting to falter. And while some experts are urging investors to "buy the dip"…others are warning that the worst crash in financial history is straight ahead. Who's right…who's wrong? And more importantly, what should you do with your money right now to get ready?
The answer could save you potentially hundreds of thousands of dollars in the coming weeks.
Make no mistake, a major market shift is already underway... and this is the exact day it's going to hit U.S. stocks.
Targa is a storage and transport company for natural gas and oil, with a focus on large shale plays in Texas and Oklahoma. It has over 30,000 miles of pipeline, six terminals, and over 47 natural gas processing facilities. The company makes fee-based revenue for transporting and storage of oil and gas, and has managed to stay profitable as natural gas has slid to multi-year lows.
Action to take: The out-of-the-money option looks attractive, as shares have been trending up in recent weeks. Common shares, however, yield 9 percent, an unusually high yield for a traditional C-corp stock. Other energy infrastructure companies offering high yields typically structure themselves as partnerships.
With a likelihood of shares rallying, the shares look better than the option thanks to the high yield investors can get while waiting for a move higher.