Bullish 3-way play in Pioneer Natural
Chris McKhann | [email protected]
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.