During late September, the Steamroom has been monitoring some aggressive option activity in USO calls. At the time, oil and gas names were under pressure with light and sweet crude trading under $45/barrel and Exxon Mobil stock taking a beating over a supposed accounting scandal. The player purchased a total of 173K contracts of the October $11.5 call which cost around $3.3 million dollars in pure premium.
Since then, this oil ETF has pushed right in to the money for our large call buyer and subsequently paid out profits to the tune of $3 MILLION DOLLARS.
The player purchased these calls around $.18 cents. Usually when you get these large bets the option gives you ample opportunity to buy it even cheaper. The folks in the Steamroom were able to get this option closer to $.1. I myself bought $.12 and sold $.2, missing out on a lion’s share of the move.
You’re seeing firsthand here the power of following order flow in the derivatives markets. There is some timing required on your part though which is the tough part. Come check out how we do it though on a daily basis through intraday trades and swing trades!
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