Options Traders Blast This Booming Energy Stock

Jefferies, meanwhile, set a tepid FTI price target

Jun 22, 2018 at 2:17 PM
facebook twitter linkedin


Oil prices are soaring today, as traders react to reports of a smaller-than-anticipated output boost from the Organization of the Petroleum Exporting Countries (OPEC). One name getting a halo lift is oil services stock TechnipFMC PLC (NYSE:FTI), which was last seen up 6.3% at $32.70 -- brushing off a tepid brokerage note -- and options traders are targeting even bigger gains.

In fact, Jefferies earlier boosted its price target on TechnipFMC's U.S.-listed shares to $30 -- a discount to current trading levels, and well below the average 12-month price target of $36.31. Nevertheless, the shares are on track for their biggest one-day gain since April 10.

More than 9,000 calls have changed hands on FTI today, too, 17 times the expected intraday amount, and volume pacing in the 99th annual percentile. The July 33 call has seen the most attention, and it looks like traders could be selling to close positions here. A number of these calls were bought to open on Monday, according to data from the major options exchanges.

Elsewhere, speculators appear to be purchasing new positions at the July 34 calls. The volume-weighted average price for the front-month calls is $0.73, making breakeven $34.73 (strike plus premium paid) at the close on Friday, July 20. TechnipFMC stock hasn't traded north of here since late January, and has been stuck beneath a trendline connecting lower highs since May.

That said, the shares recently pulled back to their 160-day moving average after a significant stay above it -- a move that's had bullish implications the three other times this has occurred since the trendline formed in September. Per Schaeffer's Senior Quantitative Analyst Rocky White, previous pullbacks to this moving average have resulted in an average one-month gain of 8.89%, with all three returns positive.

fti stock price chart on june 22


A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earnings guide for Q3 before it's too late!


  
 
Special Offers from Schaeffer's Trading Partners