OptionsHouse

Options Trading News

May 8, 2013  Wed 9:42 AM CT

NBL: SEE CHART GET CHAIN FIND STRATEGIES
A complex three-way spread tops today's option activity in Noble Energy.

optionMONSTER systems show that a trader bought 2,296 June 115 puts for $3.18 and sold the same number of June 105 puts for $0.66 and June 120 calls for $2.07. The volume at all three strikes was multiples of previous open interest, clearly indicating new positions.

This combination trade is looking for NBL to be down to or below $105 by expiration in mid-June. It cost just $0.45 to open, which is the potential loss if NBL is between $115 and $120 at expiration. The maximum gain would be realized with the stock at or below $105, while the trader would be effectively short the shares if they rise above $120.

This could well be a strategy known as a put spread collar. That would be protection against a long position in the NBL shares, but only provides a hedge down to that $105 price. (See our Education section)

NBL is down 0.63 percent to $116.16 this morning. Yesterday's close was the highest for the oil and natural-gas company since the stock reached $117.96 on April 11. Share dipped to the  $105 support level in the next week.

optionMONSTER systems show that 8,239 NBL options have changed hands, compared to its daily average of 1,200 in the last month.
Share this article with your friends


Related Stories

NBL

Short-term bulls like Noble Energy

June 10, 2015

The oil and natural-gas producer fell below its 50- and 100-day moving averages after reporting earnings in early May but has held support in recent weeks.

Invest Like a Monster - San Antonio: October 9-10

Premium Services

Archived Webinar

Education & Strategy

Real vs. Synthetic

We now know that there are two ways of creating a call position, a put position, and a stock position. We can simply use the actual real security or we can recreate it synthetically. We can create these positions in both long and short forms and this ability sets up an interesting scenario--an arbitrage!

View more education articles »