Options Trading News

December 21, 2012  Fri 10:16 AM CT

Denbury Resources has been rebounding for more than a month, and one trader is betting that the oil and gas company will hold its current level in coming weeks.

optionMONSTER's tracking systems detected the sale of 5,000 January 16 puts in a single print for $0.50. The volume was more than 8 times higher than the strike's open interest of 581 contracts at the start of the session, clearly showing that this is a new position.

DNR is down 1.71 percent to $16.10 this morning but has been trending higher since bouncing off support near the $14 level in mid-November. On Monday the stock closed above its 200-day moving average for the first time since Sept. 21.

Today's put seller is looking for DNR to stay above the $16 strike price at expiration in four weeks. The trader will face the obligation to buy the stock if it is below that level at that time, for an effective price of $15.50 including the credit from the put sale.

Denbury saw bullish option activity on Dec. 11 when a trader bought January 16 calls, which are now in the money.
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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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