Interesting Trade on Frontier Oil (FTO)

Shares of Frontier Oil Corp. FTO are higher on the session by 3.88%, currently trading at $14.46. The stock has been moving largely higher over the past six months and is currently trading above both the 50-day and 200-day moving averages, which is bullish. Options traders are making an odd, though still bullish, bet on the name today. The August $15 call was purchased 2,000 times, on the offer, on open interest of 58 contracts and the October $17.50 call was sold 2,000 times, on the bid, on open interest of 1,182 contracts. This is known as a calendar call spread and it is interesting because it exposes the trader to losses above the $17.50 level, after August. If Frontier Oil were to rise sharply, before August expiration, the trader will be exposed to losses above $20.00, but if FTO rises sharply after August expiration, then the trader is exposed to any losses above $17.50 (plus any profits they took down on the August contract). Long story short, this is a complex options trade and should only be executed if you fully understand the implications of such a trade. Frontier Oil Corporation is an independent energy company, engaged in crude oil refining and the wholesale marketing of refined petroleum products. The Company operates refineries in Cheyenne, Wyoming and El Dorado, Kansas with a total annual average crude oil capacity of approximately 187,000 barrels per day (bpd). Frontier's Cheyenne Refinery has crude oil capacity of 52,000 bpd on a 12-month average.