Options Trading News

February 7, 2013  Thu 9:29 AM CT

Pioneer Natural Resources is drawing a bullish combination trade as shares hit an all-time high this morning.

Total option volume exceeds 15,800 contracts in PXD, more than triple the total daily average in the last month. A three-way trade makes up almost all of that activity, according to optionMONSTER's tracking systems.

A trader bought 4,987 September 130 calls for $11 and sold the same number of September 150 calls for $4.06 and September 110 puts for $7.16. Open interest was below 15 contracts in all three strikes before today's trading began, so these are clearly new positions.

The trader takes in a small credit, which will be the profit if PXD remains between $110 and $130. Maximum gains will come if shares run up to the $150 level or above, but trader faces the risk of having to buy shares if they are below $110.

PXD is down 0.4 percent to $124.61 after hitting a new lifetime high of $125.37 earlier in the session. Shares  of the independent oil and natural-gas company were down at a 52-week low below $78 in June.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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