How one bear is playing Ferrellgas
David Russell | [email protected]
optionMONSTER's Depth Charge tracking system detected the purchase of 2,000 February 17.50 puts for $3.60 and the sale of an equal number of November 17.50 puts for $1.90. Volume was below open interest in the November options but not in the February puts, indicating that an existing position was rolled from one contract to the other.
FGP is up 0.22 percent to $15.74 in morning trading but has lost 12 percent of its value in the last month. The propane stock is now below the $17.50 strike price, leaving those puts in the money. Given that they expire today, the investor rolled the trade to prevent themselves from being assigned a short position in the name.
Instead, the trader will remain exposed to further downside in the stock, but with limited risk to suffering losses in the event of a rally. Adjusting the trade cost $1.70. (See our Education section for more on how trading options can be safer than buying and selling shares.)
FGP normally trades fewer than 700 contracts in a session, but volume is almost 6 times that amount already today. Puts outnumber calls by more than 1,000 to 1, according to the Depth Charge.