OPTIONS ALERT: Refineries (SUN, VLO, FTO, TSO)

Posted in Options 
October 15th, 2009

Refiners are gaining today after inventory data showed improving utilization rates.  As one of the few groups yet to rally in this market, and  most  expecting a Q3 that is just as, if  not  worse, than Q2, optimistic traders are scooping up chunks of calls for November.  Also, many companies such as Sunoco (NYSE: SUN) and Valero (NYSE: VLO) have begun to shut down operations at many plants.

  • Valero (NYSE: VLO)  November $23 calls are trading 5,964 vs OI of 314,
  • Frontier (NYSE: FTO)  November $15 calls are trading 5,399 vs OI of 2,870,
  • and Tesoro (NYSE: TSO)  November $16 calls are trading 5,054 against OI of 2,996.

All of these positions are in out of the money calls looking for the group to have a sustained rally, or possibly looking for consolidation in the industry as conditions continue to be tough and cost cuts and merger synergies are needed to operate  efficiently. (12:55 PM EST)

Joe Kunkle OptionsHawk.com

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