Big Call Buys Seen in Energy Transfer Partners (ETP), Kinder Morgan (KMI)

We like seeing past winners come back with more buying and today we have two of those this morning.  They’re buying up calls in Energy Transfer Partners (ETP), and in Kinder Morgan Inc (KMI).

We wrote about a call buy in Energy Transfer Partners (ETP) back on June 26, and that turned out to be a quick winner. Not a huge winner but nice none the less.  Now, a trader just bought 5,000 ETP January $57.50 calls, paying the ask $2.80. That’s the kind of conviction we like to see.  That buy has a transaction value of $1.4 Million.  This trader seems to feel confident in his “knowledge” of the company.

Energy Transfer Partners (ETP) is currently trading at $56.95 down 4 cents on the day. The stock is actually off it’s low of the day since the call buy as it bounced up from $56.60.  ETP has a 52 week high of $59.29, and a low of $50.00 for the year.  It’s traded just under 300,000 shares so far today versus it’s average volume traded of 1,500,000.  So this kind of large call buy is pretty unusual given this stocks average trade volumes.

Energy-Transfer-Partners-ETP-logoEnergy Transfer Partners (ETP) has seen some analyst action the past week with Credit Suisse initiating coverage.  I wouldn’t be surprised to see an upgrade from Stifel Nicholaus, or another analyst, come out in the near term, causing a nice quick spike in the price of these calls.  Coincidence?  I think not.

It also could be related to a new pipeline deal, as it was the last time a call buyer came in on this one.

We like this trade so have jumped on the bandwagon.  Ready for takeoff.

Meanwhile Kinder Morgan Inc (KMI) was a big winner a few weeks ago, and now a trader thinks it’s ready to go higher again.  A trader bought 4,680 of the KMI October $40 calls at the ask of $60 cents. It actually looks like this was a roll from the September $40 calls of which 6491 were sold at 19 cents.  That makes for a transaction value of almost $281,000. A relatively good sized bet for this name.

Kinder Morgan Inc (KMI) is currently trading at $39.09 up just 4 cents on the day, though well off its earlier high of $39.26 hit when the call buying happened.  KMI has a 52 week high of $42.49, and a low of $30.81 for the year.  It’s traded 2.5 million shares today so far, well below normal volume, which is 16.8 million shares on average.

Kinder Morgan Inc (KMI)announces quarterly earnings October 14, So this could be related to that, but we doubt it.  These big, insider/hedge funds/analyst call buys are usually based on a short term catalyst.  In this case it could be an upgrade, or something related to the KMI corporate events.   Whatever it is, we love Kinder Morgan Inc (KMI) and it’s yield so we are in the common.  We’ve got enough other options on our plate for now.