Time to get LONG ECA

Encana Corporation engages in the exploration, development, production, and marketing of natural gas, oil, and natural gas liquids in North America.  We have seen high levels of call activity for several days and today we saw a trader buy 2790 ECA March 20 Calls for $.35.  This gives the buyer the right but not obligation to buy 279,000 shares above $20 by March expiration.  The chart looks great as the stock is strongly breaking  through $19.60 and I think the stock can push to its 52 week high of $20.55.

Now, lets look at a credit spread to take advantage of the increased volatility that is generated from a trader buying calls.

The Trade: Selling the ECA March 20-19 Bull Put Spread for $.45 Credit
Risk: $55 per 1 lot
Reward: $45 per 1 lot
Breakeven: $19.45

I like this trade, because I can make money if the stock is higher, lower, or even flat.

Andrew Keene

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