Big bearish trade targets Seadrill
David Russell | [email protected]
optionMONSTER's Depth Charge monitoring system detected the purchase of about 5,000 November 47 puts for about $1.725 and the sale of an equal number of October 47 puts for $1. Volume was below open interest in the nearer-dated contracts, which indicates that an existing position was closed and rolled forward in time.
Making the adjustment cost $0.725 and gives the trader an additional month of downside exposure to the oil-services stock, which has been drifting lower since hitting an all-time high above $48 a month ago.The choice of in-the-money contracts is noteworthy because they're highly leveraged to a drop and would be used only by a speculative bear betting on a decline, not an investor hedging a long position. (See our Education section)
SDRL closed unchanged at $45.98 yesterday. It rallied more than 50 percent between April and mid-September but has been making lower lows and lower highs since. The shares now appear to be hitting resistance at the same $46 level that was recently support, which could make some chart watchers expect a more aggressive selloff.
Total option volume was quadruple the daily average in the session, according to the Depth Charge. Puts outnumbered calls by almost 10 to 1.