Options Trading News

January 4, 2013  Fri 9:55 AM CT

Linn Energy is trying to come back from its 2012 lows, and one trader is betting that the stock will stay above those levels in coming months.

optionMONSTER's tracking systems detected the sale of 5,000 April 35 puts in a single print for $1.35. The volume was more than 4 times the strike's open interest of 1,179 at the start of the day, clearly indicating that this is a new position.

LINE is off 0.22 percent to $36.37 this morning. The oil and natural-gas company gapped higher from support at the $35 level, near its 52-week low, with the broad market rally on Wednesday.

Today's put seller is looking for the stock to close above that $35 level at expiration in mid-April. The trader will face the obligation to buy shares if LINE is below that strike, but at an effective price of $33.65 once the credit from the put sale is included. (See our Education section)

The trade pushed total option volume in the name past 8,000 contracts, more than triple its daily average in the last month.
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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.

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