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Option Brief: Linn Energy LLC (NASDAQ:LINE) has been hit with heavy short-term call activity in its options pits of late, as evidenced by the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.80. This ranks just 7 percentage points from an annual low -- indicating short-term traders have rarely been more call-heavy toward LINE throughout the past year. Today, the oil and natural gas provider is seeing more of the same, with about 21,000 calls Ė nearly six times the intraday norm -- crossing the tape thus far. By comparison, roughly 7,900 puts have been exchanged.
Stealing today's spotlight is the weekly 11/1 30-strike call, where 5,838 contracts have changed hands. About three-fourths of the contracts crossed at once, when a block of 4,240 went off at the ask price of $0.10, and today's volume exceeds current open interest at the strike, suggesting long calls have been initiated here. Meanwhile, data from the International Securities Exchange (ISE) confirms some of the suggested buy-to-open activity.
Right now, LINE is up 6.6% to trade at $28.14, after last night reporting an improvement in revenue from last year's third quarter. What's more, the company forecast strong fourth-quarter guidance, and this morning announced a monthly dividend payment and cash distribution to shareholders. It seems today's call buyer is banking on additional upside through the week's end, anticipating LINE will leap another 7.7% to finish atop the breakeven price of $30.10 (strike plus the ask price). Currently, the call has a roughly 1-in-7 chance of being in the money at this Friday's close -- when the option expires -- as its delta stands at 0.15, or 15%.
From a broader technical perspective, Linn Energy LLC (NASDAQ:LINE) has shaved off 27% over the past six months. However, more recently, the stock has added 38% since hitting a three-year low of $20.35 on July 5.