“Oil is edging lower after hitting its highest price in more than two years, but one investor apparently thinks that more upside is ahead. optionMONSTER’s tracking systems detected an unusual trade in the PowerShares DB Commodity Index Tracking ETF (NYSE:DBC), which mostly consists of crude oil futures. A block of 2,500 January 26 calls was sold for $1.16 against existing open interest. At the same time, 1,250 February 27 calls were bought for $0.85 and 1,250 April 27 calls were purchased for $1.28,” David Russell Reports From Option Monster.
Russell goes on to say, “The transaction yielded a net credit of about $0.10. While investors often roll their positions to future months, today’s trade was noteworthy because the trader’s money was split between two expirations. That resulted in a lower cost than if the entire position had simply been shifted to April, showing how options provide an array of alternatives to investors looking to manage risk. DBC fell 0.4 percent to $27.41 in morning trading. The fund is up 28 percent in the last month.”
“Interestingly we also saw a large call roll in US Airways, which has recently been drawing bullish activity. That could be an important indicator because airlines tend to move opposite the price of energy. The combined activity reflects a belief that crude oil it done rising for at least the next few weeks. Overall option volume in DBC is 12 times greater than average today, with calls accounting for 97 percent of the activity,” Russell Writes.
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