Bears want to shred Noble Energy
David Russell | [email protected]
optionMONSTER's Depth Charge trade scanner detected the purchase of more than 3,000 November 92.50 puts against open interest of 545 contracts. Premiums shot up from $0.35 to $0.80 as the trades crossed and the stock pushed lower, although most of the volume priced at the lower end of that range.
Owning puts locks in the price where investors can sell shares in the oil and natural-gas producer, so they will appreciate in value in the event of a selloff. The unusual thing about today's activity is that they expire tomorrow, indicating they expect a drop in the near term. If it ends the week above $92.50 those contracts will become worthless. (See our Education section for more on how calls and puts can be used to time market moves.)
NBL is down 2.18 percent to $92.44 in afternoon trading. It rallied more than 20 percent in the summer but has been stalled around its current range since September. That could be leading some traders to believe that it's now ready to reverse to the downside.
Overall option volume in NBL is 6 times greater than average so far today, according to the Depth Charge. Puts account for almost two-thirds of the activity.