Analyst: Oil Stock Boasts Clear Positive Event Path

While oil stocks rise across the board amid escalating tensions in the Middle East, Diamondback Energy Inc (NASDAQ:FANG) stock is getting an extra boost, up 2.8% to trade at $182.44, after Barclays upgraded the oil equity to "overweight" from "equal weight." The analyst in coverage noted the company has one of the "clearest positive event paths," pointing towards its $26 billion acquisition of Endeavor Energy.

Diamondback Energy stock opened today's session at $183, and is testing a channel of lower lows since late July. Even after pulling back 12.9% over the last three months, FANG still boasts a 14.5% year-to-date lead.

FANG's normally quiet options pits are seeing higher-than-usual volume amongst call traders. So far, 1,300 bullish bets have exchanged hands, volume that is double the average intraday amount and more than three times the number of puts traded. Most popular by far is the October 175 call, with the majority of the action on the sell side.

Options traders have skewed calls for a while now. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open nearly eight calls for every put in the past two weeks. The resultant 10-day call/put volume ratio ranks in the top of its annual range, meaning buyers have never shown a greater appetite for bullish bets during the past year.