3 Stocks With Unusual Call Option Volume – What It Signals

Key Points

• Recently, new call option buying activity has floated into three stocks, signaling to investors that traders are highly convinced of higher prices ahead.
• Fundamentals back up their decisions, and analysts think double-digit upside potential exists.
• Connecting the dots will also help investors justify looking at these trades for themselves in the coming months.

When investors try to gauge the market's sentiment for a group of stocks, they typically look at who has been buying into them lately with the hopes of understanding the reasoning behind these decisions. However, buying stock is not the only way large traders and market participants express their bullish views on a company's future. In fact, there is a much deeper (and more meaningful) way for them to gain exposure to their views.

This can be done through stock options, calls to be specific, as they go up in value if the underlying stock also goes up in value. Considering that stock options carry two essential factors, investors can see the higher stakes in these instruments. The first factor is leverage, as a decent swing in a stock can make an option's price swing by multiples more, and the second is the timing of the trade since options expire worthless if a move hasn't happened by a certain date.

Knowing that options trades need to carry a higher level of conviction, investors can see how unusual call options trading activity can signal much more sentiment than just regular stock buying. This is why keeping an eye on the breakouts in Occidental Petroleum Co. NYSE: OXY for the energy sector, PDD Holdings Inc. NASDAQ: PDD for Chinese retail, and even BP NYSE: BP as another player in oil gaining attention from markets today.

Occidental Petroleum Stock: Value & Momentum?

With the legendary value investor Warren Buffett buying up to 29% of Occidental Petroleum as of the latest quarter, more and more market participants have gotten behind the idea that the energy sector could start to break out in the coming months and quarters.

As recent trade tariff announcements are set to change the way markets treat the United States dollar and shift the entire trade activity landscape across the globe, traders have begun to share the bullish outlook in oil expressed by Buffett’s purchase of Occidental Petroleum, but there’s more to it.

Up to 116,673 call options were bought as of February 2025, which is much more than the usual 80,070 trading volume in these instruments, a bullish sign to be considered by investors today moving forward in the world of energy stocks. As bullish as this seems, though, these weren’t the only players willing to express an optimistic view.

Wall Street analysts, particularly those at Stephens, saw fit to keep their overweight ratings on Occidental Petroleum stock, this time also delivering a valuation of up to $71 per share on the name. This target would not only call for the stock to flirt with its 52-week high but also call for a rally as big as 46% from where it trades today.

China Stocks Are Calling For Attention

Now that China’s government is stimulating more of its economy, investors worldwide are paying attention to the potential future that may come once all this stimulus trickles down to the consumer (and stock market) level. This is why traders chose to go with a retail name like PDD since it covers both areas of this spectrum.

Considering that the stock still trades at 73% of its 52-week high, and the potential upside is as present as ever with all of the stimulus looming over its head, investors shouldn’t be surprised to see call option buyers plunge into this stock lately to bet on the potential breakout in this theme.

Wall Street analysts seem to agree with this theme, as they have now placed a consensus price target of up to $173.4 per share on it, calling for not only another 52-week high in this list, but also another double-digit upside at 45% from where it trades today. Looks like investors need to pay attention to this recent interest from traders in this Chinese name.

An Earnings Beat Drove Traders Into BP Stock

As of February 2025, up to $633,929 floated into call options for BP stock, signaling to investors that some bullish developments might be brewing in this name for the coming months. Apart from the fact that Warren Buffett is also bullish on it, here is a very strong reason to share this view.

Wall Street analysts now forecast up to $0.99 in earnings per share (EPS) for this name, which is expected to come in the third quarter of 2025. This is a significant increase from today’s $0.44 level, more than double. Considering that EPS typically drives stock price performance, the reasoning behind these traders is becoming clearer for investors today.

Also, other analysts, such as those from Wolfe Research, as of January 2025, decided to initiate their coverage on BP stock with a valuation of up to $50 per share. This view represents yet another 52-week high for today’s list and a net implied rally of up to 53% from where it trades today.