Options Trading News

October 11, 2013  Fri 3:16 AM CT

An enormous put spread topped yesterday's option activity in natural-gas company Energy XXI.

optionMONSTER systems show that 20,000 each of the March 28 and 22 puts changed hands, with the 28s bought for $2.55, and the 22s sold for $0.85. The volume was multiples of the previous open interest at each strike, so this is clearly new positioning.

The vertical spread cost the trader $1.70, which is the maximum amount at risk. The maximum gain would be $4.30 if shares are below $22 at expiration in mid-March, though the trader would then be on the hook to buy shares at that level. (See our Education section)

The EXXI was up 1.76 percent to $30.56. The Bermuda-based company was above $32 on Friday, its highest price since March. Shares were down at support at $22 in late June.
Share this article with your friends



The fastest money in the market
View full report »

Premium Services

Education & Strategy

The art of trading

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.

View more education articles »