Call selling targets Magnum Hunter
Chris McKhann | firstname.lastname@example.org
MHR is down 3.74 percent at $4.63 this morning, adding to its losses of recent months. The independent oil and gas company was just shy of $6.50 on the first day of the month and above $7.50 in late February.
More than 5,000 June 5 calls have traded, mostly in a block of 4,955 sold for the bid price of $0.20, according to optionMONSTER's systems. The open interest at the start of the session was 1,453 contracts, so this is a new position.
The call selling suggests that the trader sees limited upside for MHR in coming weeks. The options could also have been traded against an equal amount of the underlying shares as a covered call position.
We do see some large purchases of the stock around the same time, which could make this a so-called delta-neutral strategy that is focused more at lower volatility than any directional move in the stock. (See our Education section)
More than 7,200 MHR options have already traded at all strikes today, compared with a full-day average of 1,900.