Bulls look for SandRidge to bounce
optionMONSTER By Mike Yamamoto (mike.yamamoto@optionmonster.com)
2 hours ago
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Traders are turning bullish on SandRidge Energy before it reports earnings near the end of this month.
Traders bought calls in two strikes yesterday, snapping up about 2,000 April 2s for $0.29 to $0.33 and 2,000 April 3.50s mostly for $0.05, according to optionMONSTER's Heat Seeker tracking program. There was no previous open interest in the 3.50s and only 894 contracts in the 2s, indicating that yesterday's trades are new positions.
These long calls lock in the price where investors can buy the stock, which lets them position for a rally with limited capital. That can be safer than purchasing shares directly because only the cost of the options can be lost on a pullback. The calls can be sold anytime before they expire in mid-April but will lose value if the stock falls. (See our Education section)
SD was up 2.63 percent to $1.95 yesterday. The stock plummeted from $69 in the second half of 2008 and has continued its downtrend since. The oil and natural-gas producer announces quarterly results on Feb. 26 after the market closes.
Yesterday's total option volume in the name was more than 50 percent higher than its daily average for the last month. Overall calls outnumbered puts by 15 to 1, a reflection of the session's bullish sentiment.
