Last week, we took a look at the two different types of options. This week, we'll continue our educational series by taking a look at three different ways to play calls.

Long Call

A long call option is one of the most basic option strategies. The buyer purchases a call option with the belief that the underlying stock is going to rally above the strike price before the option expires.

Example: Stock ABC is trading at $40, and a call option contract with a $40 strike price is priced at $2. If you believe that ABC is going to move well beyond the $40 strike, you could purchase a $40 ABC call option. With one contract carrying a price tag of $2, you would spend $200 ($2 premium multiplied by the 100 shares controlled by each contract). To give the stock time to advance, you purchase an option carrying an expiration date three or more months in the future.

Let's say your hunch pays off, and ABC rises to $50 by expiration. You might decide to exercise the option and purchase shares of ABC at $40 each. You can either hold the shares for a long-term investment, having acquired them at a discounted price -- or you can sell your 100 shares at $50 apiece, netting you a profit of $10 per share. This means that you have gained $10 per share on 100 shares, which comes to a nice profit of $1,000. Minus the $200 you paid for the original contracts, you are pocketing $800! That's a pretty nice little profit.

However, you don't have to touch the shares at all to cash in on a profitable call play. You can simply sell to close the option -- which, at expiration, would have an intrinsic value of $10 (stock price of $50 less strike price of $40). Accounting for 100 shares per contract, you would reap the same $800 net profit as in the example above.

Your maximum profit on a long call is theoretically unlimited, and gains are achieved when the price of the underlying stock (ABC in this example) advances past the strike price of the long call + the premium paid.

What if the stock falls? The most you can lose is your initial $200 investment, and you don't need to take any further action to exit the trade -- simply let the call option expire worthless. That's a far more palatable loss than if you had purchased $4,000 of the stock – right? Your maximum loss in this scenario is the premium paid, plus any commissions paid.

Call Spread

The bull call spread is an option trading strategy to use when you think the price of an underlying stock is going to advance moderately in the short term. To employ a bull call spread, you purchase an at-the-money (ATM) call option and sell a higher out-of-the-money (OOTM) call option on the same underlying stock with the same expiration month.

Example: Stock ABC is trading at $42, and you believe it will rally soon. You employ a bull call spread by purchasing a July 40 call for $300 and sell (or "write") a July 45 call for $100. Your net investment is a debit of $200 ($300 purchased less the $100 sold).

The stock advances to $46 by the expiration date, meaning both options expire in the money. The 40 call has an intrinsic value of $600, and the July 45 call has an intrinsic value of $100. This means that the spread is now worth $500 at expiration. Less the initial debit of $200, the profit is $300.

In other words, your maximum profit is the strike price of the short call, less the strike price of the long call, less the net premium paid. This best-case outcome is achieved when the price of the underlying stock settles at or above the strike price of the call you sold.

If the stock were to drop below the strike price of the lower (purchased) call, both options expire worthless. You would lose your initial $200 debit -- which represents your maximum loss.

Protective Call

A protective call, or short hedge, is a strategy using a call option on an underlying stock to cap the (otherwise unlimited) risk on a short sale. The call option offers protection against a rise in the market price of the stock shorted, as it establishes the maximum price to be paid in order to buy back the shares.

Example: You decide to sell 1,000 shares of ABC short when it is trading at $20.25. You are hoping to make a profit on a future decline in shares -- as selling them short will allow you to buy back the shares at a total price below $20,250 ($20.25 * 1,000), should they decline as expected. The risk is if the shares of ABC advance, this would cause you a substantial loss.

In order to hedge against a rise in the shares, you decide to purchase 10 ABC July 20 call options at $1.10 (a total cost of $1,100, after accounting for 100 shares per contract). Doing so assures you a purchase price of $20.00 per share of ABC if it finishes above this strike at expiration.

If ABC were to rise to $22.00, you would exercise the July 20 calls to buy the 1,000 shares back at the strike price. Using this scenario, your total loss would be limited to $850.00. That is the call premium ($1,100) less the difference between the price at which the shares were shorted and the strike price ($0.25 * 100 = $250).

Next week we will take a deeper look at some different ways to play puts, so make sure to check back and learn more about option basics. Remember, you can always take advantage of our Getting Started with Options home-study program -- click here for more information.

To the delight of cult enthusiasts everywhere, Netflix, Inc. (NASDAQ:NFLX) has released the trailer of its "Wet Hot American Summer" prequel -- an eight-part series set for release Friday, July 31. Not only will members of the original cast return -- Amy Poehler, Paul Rudd, and Janeane Garofalo, to name a few -- but cameos from Kristen Wiig, Jon Hamm, and "Weird Al" Yankovic are also highly anticipated.

While the "Wet Hot American Summer: First Day of Camp" is likely generating plenty of buzz, it's done little to move the stock -- with NFLX last seen 0.1% higher at $656.21. Longer term, the equity has been a technical standout, and is up nearly 92% year-to-date.

More recently, the shares have pulled back near their rising 40-day moving average after hitting an all-time peak of $706.24 in late June, following the firm's big stock split announcement. If past is precedent, the equity could be poised to resume its trek into record-high territory. In fact, according to Schaeffer's Senior Quantitative Analyst Rocky White, in the nine other times this signal has occurred during the last three years, NFLX has averaged a 21-day return of 4.1%, and is positive two-thirds of the time.

This would most likely please option traders, who have been initiating long calls over puts at a rapid-fire rate in recent months. Specifically, the equity's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 1.09 ranks in the 81st percentile of its annual range.

Outside of the options pits, however, not everyone has climbed on board the stock's bullish bandwagon. Of the 28 analysts covering the shares, 11 still maintain a "hold" or "strong sell" recommendation. Meanwhile, the average 12-month price target of $630.59 stands at a discount to current trading levels. Should Netflix, Inc.  (NASDAQ:NFLX) continue to outperform on the charts, a round of upgrades and/or price-target hikes could fuel its fire.

After five years of declines, copper prices stabilized in 2016, and have surged higher recently, now approaching a three-year high. The metal is used for many things, including factories, electronics, and power generation. Due to its wide use across many sectors, copper is often considered a leading indicator of economic activity. Naturally, this could be an argument for higher stock prices going forward. This week, I will look at historical copper prices to see if a bullish copper market tends to lead to a bullish stock market.

Copper’s 1-Year Return Since 1975

Copper has been extremely strong over the past year, gaining 45%. According to our theory, a strong demand for copper foretells a strong economy, which should thus bolster stock prices. I went back to 1975 to see what one-year copper returns have meant for the S&P 500 Index (SPX) over the ensuing year.

In the table below, the far left column shows the 12-month return for copper. The rest of the table shows S&P 500 returns over the next 12 months. If our theory that strong copper demand leads to a bullish stock market is correct, then we should see better returns for the S&P 500 at the bottom of the table. Interestingly, the highest average S&P 500 return interestingly comes when copper has performed the worst over the previous 12 months. However, this does not dismiss our theory just yet. The high average return could be a function of the indicator capturing strong bounce-back rallies after crashes.

In our current situation, in which copper is up 45% over the past year, stocks do quite well going forward. In the table below, you see the S&P 500 averages a gain of more than 11% over the next year, with 88% of the returns positive, going back to 1975. The consistency of the stock returns is best when copper has had a strong 12 months, as measured by the percent positive and standard deviation of returns.

Copper's 1-Year Return Since 1990

Things are different now than in the 1970s and 1980s. I wanted to see how this data looks using more recent time frame. The table below is the same analysis as above, except since 1990. The results are similar. When copper performs its worst, then the S&P 500 has its highest average return going forward. When copper has done the best, which is our current situation, then it too has been beneficial for stocks; the S&P 500 has averaged a 12% 12-month return with an impressive 93.6% of the returns positive.

Options activity on GrubHub Inc (NYSE:GRUB) has been on the upswing over the past year. Currently, there are 126,283 options open on GRUB stock -- 100,436 calls and 25,847 puts -- in the 93rd annual percentile, and fewer than 22,100 contracts shy of the 12-month peak of 148,356 contracts hit on Aug. 4. As a point of comparison, total open interest fell to a 52-week low of 19,448 contracts on Sept. 19, 2016.

The bulk of this activity has centered at the January 2018 45-strike call, where 46,620 contracts reside -- GRUB's top open interest position. While it's not clear whether these positions were bought or sold, Trade-Alert indicates most of the activity occurred in May and June, when the stock traded as low as $41.35 (June 12) and as high as $47.84 (June 23), and proceeded a late-April earnings bull gap.

More recently, the September 55 call has been GRUB's most active option in the past two weeks, with 1,062 options traded. This strike is home to peak front-month open interest of 2,578 contracts, and data from the major options exchanges confirms buy-to-open activity. In other words, traders expect the equity to settle north of $55 at tomorrow's close, when the options expire.

This increase in options trading has coincided with GrubHub stock's surge up the charts. Year-over-year, the shares have added nearly 33%, and almost 47% year-to-date. In fact, the shares topped out at a record high $57.61 on Sept. 7, and was last seen trading at $55.31 -- well above the $54 floor the security established following its early August bull gap. 

GRUB could be due for even more upside, too, should short sellers and analysts start to capitulate to the equity's positive momentum. Short interest on GrubHub has more than doubled year-to-date to 19.36 million shares. Not only does the stock's ability to rally to record highs amid such intense selling pressure speak volumes to its underlying strength, but it would take more than three weeks to cover these bearish bets, at the average pace of trading.

A number of analysts remain skeptical of GRUB shares, as well, with five of 16 maintaining a "hold" or worse rating at last night's close. Plus, D.A. Davidson this morning initiated coverage with a "neutral" rating and $48 price target -- below the average 12-month price target of $54. This leaves the door open for upgrades and/or price-target hikes, which could draw more buyers to GrubHub's table.

Biotech stock bluebird bio Inc (NASDAQ:BLUE) continues to be a major winner for shareholders and options traders alike. The equity just hit a two-year high of $136.85, and was last seen 5.3% higher at $133, bringing its one-year gain to more than 111%. Not surprisingly, bullish options traders continue to target BLUE, betting the shares will rise even further in the weeks ahead. 

Starting with data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), bluebird has a 10-day call/put volume ratio of 5.52, which ranks in the 85th annual percentile. This reveals a stronger-than-usual appetite for bullish options bets.

Moreover, the security has a Schaeffer's put/call open interest ratio (SOIR) of 0.47, showing call open interest in the front three-months' series of options more than doubles put open interest. In fact, call open interest overall is at an annual high, with 23,665 contracts outstanding. 

Seeing the largest increase in open interest during the past 10 days was the September 135 call, and was one of several strikes in the front-month series to see buy-to-open action -- albeit amid relatively low absolute volume. With the September series set to expire at the close tomorrow, a number of traders bet on more upside for BLUE stock through the end of this week. 

The October series has also been also popular. Most notably, the deep out-of-the-money October 150 call saw a notable rise in open interest, and some buy-to-open activity has been confirmed. Those opening long positions here are betting on bluebird bio shares rising another 12.8% -- and into territory not seen since August 2015 -- before the contracts expire at the close on Friday, Oct. 20. 

Options volume is accelerated today, too. At last check, puts and calls are both running at three times the expected pace. On the call side, the aforementioned September 135 strike is seeing the most action, while the most popular put is the October 115 strike, where it looks like new positions are being purchased. 

Interestingly, it's still a good time to buy short-term options. For instance, the equity's 30-day at-the-money implied volatility of 54.7% sits only 9 percentage points from an annual low. This points to tame volatility expectations for near-term contracts. Add this to the fact that BLUE's Schaeffer's Volatility Scorecard (SVS) stands at an elevated 94, meaning the stock has tended to make outsized moves over the past year relative to what the options market has priced in.

An unwinding of short interest could go a long way in helping bluebird bio stock bulls. Despite the shares' strong showing on the charts, short interest represents almost 19% of the total available float. Going by average daily volumes, this represents almost nine days' worth of buying power. 

Economic data continues to dominate the news, with the September Fed meeting kicking off on Tuesday. Policymakers are expected to leave the benchmark interest rate untouched, but market participants will be awaiting details on the Fed's plans to unwind its $4.5 trillion balance sheet. Earnings are relatively light, but traders should watch out for reports from some big names like Adobe Systems (ADBE) and AutoZone (AZO). Finally, a handful of speeches from Fed officials are set to close out the week.

Below is a brief list of some key market events scheduled for the upcoming week. All earnings dates listed below are tentative and subject to change. Please check with each company's respective website for official reporting dates.

The NAHB housing market index and Treasury international capital (TIC) flows are due out on Monday, Sept. 18. Steelcase (SCS) will report earnings after the close.

The Federal Open Market Committee (FOMC) meeting is set to begin on Tuesday, Sept. 19, along with reports on housing starts and import and export prices. Adobe Systems (ADBE), AutoZone (AZO), Bed Bath & Beyond (BBBY), and FedEx (FDX) are set to report earnings. 

Existing home sales and weekly crude inventories will hit the Street on Wednesday, Sept. 20, with the FOMC policy statement due out at 2 p.m. ET. The Fed's economic forecasts will be released simultaneously, followed by a 2:30 press conference with Chair Janet Yellen. Earnings are expected from General Mills (GIS).

It will be a full day of reports on Thursday, Sept. 21, kicking off with weekly jobless claims, the Philadelphia Fed index, the FHFA home price index, and the index of leading economic indicators. The earnings calendar features results from Manchester United (MANU).
 
A trio of Fed speeches are scheduled for Friday, Sept. 22, with San Francisco Fed President John Williams, Kansas City Fed President Esther George, and Dallas Fed President Robert Kaplan set to deliver remarks. Also on the day's docket are the Baker-Hughes weekly rig count and Markit's flash composite purchasing managers index (PMI). CarMax (KMX) and Finish Line (FINL) are on the earnings list.

As the Dow trades near record highs, the Nasdaq is trading lower amid pressure from biotechs. One drug stock in the red is cystic fibrosis specialist Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX). This retreat could create a compelling opportunity for options traders, though, as VRTX tests a key trendline with historically bullish implications.

Volatility Expectations Are Low on VRTX Stock

VRTX is trading down 2% at $153.74, not far from its 40-day moving average at $155.70. According to data compiled by Schaeffer's Senior Quantitative Analyst Rocky White, previous tests of this trendline over the past three years have yielded positive five-day returns two-thirds of the time, with an average gain of 3.44%.

Looking at the 21-day performance, VRTX is positive 63% of the time. The average return, however, is slightly more bullish at 5.64%.

Up nearly 109% year-to-date, Vertex Pharmaceuticals stock hit a record high of $167.86 on July 25, around the same time VRTX's Relative Index Strength (RSI) peaked above 80. The stock's RSI was last seen at 48.2, following VRTX's consolidation into its 40-day moving average.

Additionally, VRTX has fared well amid an increase in short-covering activity, which points to its deep-seated technical strength. During the last two reporting periods, short interest on VRTX grew 13.5% to 4.14 million shares -- or 3.2 times the stock's average daily trading volume.

For option players looking to profit from another Vertex Pharmaceuticals stock rally off its 40-day moving average, now may be a good time to do so. VRTX's Schaeffer's Volatility Scorecard (SVS) sits at 91, indicating the biotech stock has tended to exceed option traders' volatility expectations during the past year. What's more, VRTX's 30-day at-the-money implied volatility stands at 31.3% -- in the 18th annual percentile -- which strengthens the case for relatively attractive short-term options premiums.

U.S. stocks are mixed this afternoon, with the Dow outperforming its fellow equity indexes after this morning's inflation data. Among the names in the spotlight today are aerospace concern (and Dow stock) Boeing Co (NYSE:BA), Chinese online retailer Alibaba Group Holding Ltd (NYSE:BABA), and credit bureau TransUnion (NYSE:TRU). Here's a quick look at what is moving shares of BA, BABA, and TRU.

Boeing Gets 2 Price-Target Hikes on Air Force One Contract

Boeing has received two bullish analyst notes following Wednesday night's news of a $600 million defense contract for Air Force One aircraft from the Pentagon. Deutsche Bank raised its target to $300 from $280, while Berenberg lifted its target to $282 from $245. BA is up 1.3% at $245.15, not far from July's record high of $246.46. 

At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), BA sports a 10-day call/put volume ratio of 1.58, which ranks in the 95th percentile of its annual range. This suggests calls have been bought to open at an extremely fast clip relative to puts in recent weeks.

Insider Sales Can't Shake BABA's Uptrend

BABA stock has been on an impressive uptrend this year -- even reaching a record high of $179.93 earlier today -- but was last seen trading 1.1% lower at $176.94 after regulatory filings revealed that founder Jack Ma and Executive Vice Chairman Joseph Tsai will sell up to 21.5 million shares beginning in October. Despite today's dip, the China-based stock boasts an impressive 101% year-to-date gain, and is a must-buy among analysts -- all 19 brokerage firms following Alibaba have "buy" or "strong buy" recommendations.

Options Traders Prefer Puts for TRU Stock

TRU stock is down 0.2% to trade at $43.59, paring the bulk of its intraday sympathy losses with embattled sector peer Equifax (EFX). Shares of the credit bureau reached a record high of $49.46 as recently as Sept. 7, but have since plunged below key support at their 40-day and 80-day moving averages.  

While TransUnion doesn't yet have a sizable following among options traders, those who are speculating on the stock's next move appear to be bracing for more downside. TRU's Schaeffer's put/call open interest ratio (SOIR) of 2.45 ranks in the 85th annual percentile, suggesting near-term options traders have rarely been more put-heavy. 

It could be another ho-hum day on Wall Street, with stock futures pointing to a slightly lower open. Among specific stocks in focus are hospital operator Tenet Healthcare Corp (NYSE:THC), semiconductor concern Lattice Semiconductor Corp (NASDAQ:LSCC), and cancer treatment specialist Array Biopharma Inc (NASDAQ:ARRY). Here's a quick look at what's boosting shares of THC, LSCC, and ARRY. 

Sale Reports Boost THC Shares

Tenet Healthcare stock is up 7.8% ahead of the open, thanks to reports the company is exploring a sale. This comes less than two weeks from the company's big CEO announcement. At $16.24, the shares are down almost 32% year-over-year, and had been struggling to overcome their 200-day moving average. Still, today's news could have THC short sellers shaking in their boots, as these bearish bets have been rising fast for nearly a year. In fact, short interest on Tenet Healthcare is now at the highest point since at least 2002, with 33.9 million shares sold short. 

Trump Smacks Down Lattice-Canyon Bridge Deal

President Trump has blocked China-based Canyon Bridge Capital Partners’ planned purchase of Lattice Semiconductor. The stock has been struggling for months, hitting an annual low of $5.51 just yesterday, before closing at $5.72, and now analysts are lowering their outlooks. Specifically, Jefferies this morning dropped its price target $6.50, and Craig-Hallum moved its target down to $6. Most brokerages are taking a wait-and-see approach toward LSCC shares, with three-fourths of those in coverage issuing tepid "hold" ratings. 

ARRY Shares Slide After Stock Offering

Shares of Array Biopharma are down 8.5% in pre-market trading, after the company's public stock offering last night. It's been a big year for ARRY, rallying a brow-raising 200% year-over-year to trade at $10.53. Not surprisingly, sentiment is very bullish across Wall Street. For example, eight out of nine brokerages have "strong buy" ratings on the stock, and options traders have been buying calls for some time now. Specifically, Array Biopharma has a 50-day call/put volume ratio of 10.7 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), good enough to rank in the 68th annual percentile. 

Analysts are weighing in on car rental specialist Hertz Global Holdings, Inc (NYSE:HTZ), credit bureau Equifax Inc. (NYSE:EFX), and healthcare stock Opko Health Inc. (NASDAQ:OPK). Here's a quick roundup of today's bearish brokerage notes on shares of HTZ, EFX, and OPK.

Hertz Stock Pulls Back After Morgan Stanley Note

Hertz Global Holdings is reeling, down 9.5% to trade at $21.66, after Morgan Stanley downgraded the rental car stock to "underweight" from "equal weight," explaining "investor expectations may be too high" following a recent surge. The brokerage firm also raised its price target to $14 from $12, though this remains well below current trading levels.

It's been an inspiring rally for HTZ stock, which has tacked on a whopping 154% since its June 21 eight-year low low of $8.52. Part of this upside is likely due to a recent round of short covering, with short interest down 14.9% in the most recent reporting period.

Embattled EFX Stock at Risk for Downgrades

The bad news keeps coming for Equifax. EFX shares are currently down 8.7% to trade at $90.42, fresh off a new two-year low of $90.12, after Barclays and J.P. Morgan Securities cut their price targets to $115 and $135, respectively. Probes into the massive data breach are growing, and Equifax CEO Richard Smith's apology in USA Today on Tuesday did little to satisfy U.S. senators, who helped spark an investigation by the Federal Trade Commission (FTC). Smith will testify in front of a House of Representatives panel on Tuesday, Oct. 3.

EFX stock has shed nearly 35% since the news of the data breach broke last Friday, but analyst sentiment remains overwhelmingly positive for now. Of the 14 brokerages covering EFX, 11 rate the stock a "buy" or better. This means that there is plenty of room for downgrades to pour in, which could send Equifax stock even lower.

Analyst Downgrade Sinks Opko Health Stock

Opko Health shares are down 5.1% to trade at $6.14, after J.P. Morgan Securities downgraded the pharma stock to "neutral" from "overweight," while also reducing its price target to $7 from $12. OPK stock has shed 34% year-to-date and fell to a four-year low of $5.85 on Aug. 17. The shares remain heavily shorted, too. The 77.82 million shares sold short represents a lofty 23.2% of OPK's total available float.

Analysts are weighing in on information technology (IT) concern VMware, Inc. (NYSE:VMW), computer graphics company NVIDIA Corporation (NASDAQ:NVDA), and online retailer eBay Inc (NASDAQ:EBAY). Here's a quick roundup of today's bullish brokerage notes on shares of VMW, NVDA, and EBAY.

VMW Hits New High After Barclays Upgrade

VMW received an upgrade to "overweight" from "equal weight" at Barclays, along with a price-target raise to $130 from $109. The new target stands some 3.8% north of VMware's reigning all-time high of $125.25, set back in October 2007. Meanwhile, VMW hit a new three-year high of $111 earlier today, and is currently up 0.2% at $110.68.

VMW's Schaeffer's put/call open interest ratio (SOIR) of 0.95 ranks in the 88th percentile of its annual range, which suggests near-term options traders have rarely been more put-biased during the past year. Conversely, over half of analysts following the stock carry "buy" or better ratings.  

Susquehanna Issues Lackluster Price-Target Hike on NVDA

Susquehanna raised its price target on NVDA stock to $155 from $140. This move comes on the heels of a one-year gain of 172% for Nvidia shares, though the upwardly revised target still stands more than 9% south of the stock's current perch. Last seen trading up 0.3% at $170.86, the PC graphics concern reached a record high of $174.56 on August 8, and has since been consolidating into its 40-day moving average.   

Options players are considerably more upbeat than Susquehanna. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), NVDA has a 50-day call/put volume ratio of 1.55, ranking in the 76th annual percentile. This suggests options traders have bought to open calls over puts at a faster-than-usual clip in recent months.

D.A. Davidson Rates EBAY a "Buy"

D.A. Davidson initiated eBay with a "buy" rating and a price target of $45, just one day after the stock reached a record high of $38.50. The outperforming stock is trading up 0.3% at $38.40, bringing its year-to-date gain to 29%.

However, speculative players have loaded up on bearish options. At the ISE, CBOE, and PHLX, EBAY carries a 50-day put/call volume ratio of 0.87, which ranks in the 95th annual percentile. The stock also sports a SOIR of 1.80, in the 90th percentile. In other words, options players have rarely been more put-heavy during the past 52 weeks.

Oil prices have been rising this week -- with October-dated futures trading above the $50-per-barrel mark today, after getting a boost yesterday on the International Energy Agency's (IEA) upwardly revised 2017 global oil demand forecast. While oil refiner Marathon Petroleum Corp (NYSE:MPC) is trading down 0.6% at $52.90 this morning, the energy stock recently pulled back to a historically bullish trendline, suggesting it could be an ideal time to bet on its next leg higher.

Specifically, MPC shares recently came within one standard deviation of their 200-day moving average after spending a lengthy time above this trendline. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, in the three other times this signal has flashed in the past three years, the stock has gone on to average a 21-day gain of 10.36%, boasting a 100% win rate. Based on the equity's current perch, this would put MPC in the $58.38 region -- territory not charted since December 2015.

The stock could also find support near $52.50 -- home to peak put open interest of nearly 8,000 contracts in the soon-to-be front-month October series. Heavy levels of underfoot put open interest can often create an options-related floor for a security, as the hedges related to the bets unwind ahead of expiration.

Now appears to be an attractive time to buy premium on MPC options, too. The stock's 30-day at-the-money implied volatility of 23.9% ranks in the 11th annual percentile, indicating low volatility expectations are being priced into short-term contracts.