Learn the trade here. Make it on tradeMONSTER

Options Trading News

November 13, 2012  Tue 3:16 AM CT

SD: SEE CHART GET CHAIN FIND STRATEGIES
SandRidge Energy got slammed last week, but one investor is positioning for a rebound.

optionMONSTER's market scanners yesterday detected a surge of activity in the Oklahoma-based oil and gas company: Some 2,000 January 2014 10 calls were sold for $0.30 against previous open interest, which indicates that an existing position was closed. At the same time, the trader bought 5,100 June 6 calls for $0.71 and sold 2,000 June 3 puts for $0.15. Volume was below open interest in those strikes, so they were new trades.

The overall position cost about $272,000 and increases leverage to a rally in the next eight months. It also reduces the time in the trade and is therefore looking for a move sooner rather than later. The trader faces the potential of losing money to the downside because of the short puts. (See our Education section)

SD fell 2.18 percent to $5.39 yesterday, following a 10 percent drop on Friday. That decline came after third-quarter revenue missed expectations and a large stakeholder lambasted the company's governance. Management said it's open to suggestions on how to improve.

Overall option volume was triple the daily average in the name during yesterday's session.
Share this article with your friends


Premium Services

Free Webinars

Make Money in a Volatile Market

Education & Strategy

Vexed by the VIX

Many people probably don't know that the calculation changed for the CBOE Volatility Index this week, but it's worth discussing...

View more education articles »
optionMONSTER stockMONSTER tradeMONSTER