Energy Bulls Target Obscure Canadian Firm: Options Recap


Energy stocks are rallying this week, and one big investor is targeting an obscure Canadian producer.

Roughly 83,000 March 9 calls were bought this morning in Cenovus Energy (CVE), which extracts oil from Alberta’s tar sands. The big blocks priced for $0.27 and $0.28. Some 12,000 February 8 calls also changed hands for $0.45.

Calls fix the price where investors can purchase a security, so they tend to profit when shares rally. The contracts can also generate significant leverage versus the underlying stock because of their cheap upfront cost.

Cenovus Energy (CVE) chart with 50- and 100-day moving averages.

CVE rose 4.83 percent to $8.25 in midday trading and has been in its current range since November. It’s trying to hold all-time lows, having lost three-quarters of its value in the last five years.

Energy’s the strongest major sector today as crude oil futures (@CL) try to push back above the 54 level that’s offered resistance for the last month. News on the industry has been mixed, although it’s benefited from hopes that Presidents Trump and Xi will strike a trade deal between that U.S. and China. That would be considered a positive for the global economy, along with commodities like oil.

Overall options volume in CVE is more than 20 times the average in the last month, with calls outnumbering puts by more than 200 to 1.

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David Russell is VP of Market Intelligence at TradeStation Group. Drawing on two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them apprised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.