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Options traders see one Big Oil name retesting its highest levels of the year by May

Thursday, 08 April 2021 | 00:00

Crude oil’s rough start to the week didn’t deter bullish options traders for betting on a quick rebound for a few big names in the energy space, and considering the commodity’s recent performance, perhaps they’re right to place those bullish bets.

WTI crude oil has gained about 25% this year, and is still positive over the last week despite Monday’s pullback. With the Covid vaccine rollout well underway in the U.S. and reopening hopes higher than ever, it’s no surprising that traders took advantage of Marathon Petroleum’s briefly depressed call prices on Monday.

“We saw calls outpacing puts by [a ratio of] almost 4-to-1 on 2.5 times the average daily volume, and the most active options were the May 57.5 calls. We saw over 4,000 of those trade for about $2,” Optimize Advisors CIO Michael Khouw said Monday on CNBC’s “Fast Money.”

Marathon’s highest closing level of the year was March 10, at $58.18. That’s slightly below the breakeven price of these call contracts, which stands at an underlying stock price of $59.50. These calls also capture Marathon’s next earnings report on May 4, which could be the catalyst that spurs a breakout above that level when the options deadline expires on May 21.

Marathon was trading slightly higher in Tuesday’s session.
Source: CNBC

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