KeeneOnMarket
Long

Trader takes a $1.27 Million Bet in ECA to the Long Side

NYSE:ECA   ENCANA CORP
183 1 3
Encana             Corporation, together with its subsidiaries, is engaged in exploration for, development, production, and marketing of natural gas             , oil             , and natural gas             liquids in Canada and the United States. This is not the first time a trader has taken a bullish trade in ECA             and it seems that this trader has been dead-on and they are stopping anytime soon. Today a trader bought 15,000 ECA             Oct             23 Calls for $.85. This gives the trader the write but not obligation to buy 1.5 Million Shares of ECA             at $23 between now and October. Lets break-down their trade a little easier.

Their Risk: $85 per 1 lot
Their Reward: Unlimited
Their Breakeven: $23.85
Cash Outlay: $1.275 Million
Look out for the idea that the trader might actually be doing the opposite and selling shares short and using the call options as a hedge. Once you squeeze out an 85 cent profit on the short stock position, then the trade is free to the upside. Typically, this is what prop desks do to set-up big trades. Rarely, if ever, will you see a straight out "buy calls" trade. When you see a steady climb up, traders want to sell it short for the snap back down and the way to do it is to short stock and buy calls. Big money bets with hedges.
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