Berry Petroleum draws cautious trade
David Russell | [email protected]
optionMONSTER's Depth Charge monitoring program detected the purchase of 3,000 August 35 puts for $0.80 and the sale of a matching number of August 45 calls for $1.30. Volume exceeded the previous open interest in each strike, indicating that new positions were initiated.
The transaction resulted in a net credit of $0.50 and obligates the investor to sell BRY shares for $45 if they're above that level on expiration. The trader has also locked in a minimum sale price of $35 in the event of a selloff.
Known as a collar, the strategy is a common hedging technique used by investors looking to protect a long position. (See our Education section for other ways to manage risk.)
BRY rose 0.54 percent to $42.67 yesterday and is up 27 percent so far this year. Most of that gain occurred between December and March, followed by a slow drift lower in recent months.
Total option volume was 14 times greater than average in the session, according to the Depth Charge.