Put trade shows support for Williams
David Russell | [email protected]
optionMONSTER's tracking systems detected a surge of put volume in the natural-gas stock, which traded near multiyear highs barely a month ago. Some 26,299 November 31 puts were bought for $0.21 below previous open interest, and an equal-sized block was sold in the December 30s were sold for $0.69.
It appears the trader came into the day short the November puts, betting that WMB would hold its ground. Those contracts expire tomorrow, so they're now closing them out and rolling the position forward by one month. They collected an additional $0.48 of credit and lowered by $1 the level where they must buy shares.
If the stock holds its ground or rebounds, the Decembers will lose value and they'll keep the income as profit. (See our Education section for more ideas on how to turn time into money using options.)
WMB fell 0.45 percent to $31.05 in morning trading. It's lost 13 percent of its value since mid-October, when it peaked near its highest price in more than four years. The stock had been rallying steadily over the preceding four months.
Today's put trade was similar to activity on Monday, showing that some big investors still like the company despite the recent pullback. (About five minutes after today's roll, another 10,150 contracts were sold in the December 30s for $0.72, which also reflects confidence in the name.)
Total option volume is triple the daily average so far in the session.