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April 3, 2014  Thu 3:47 AM CT

Huge call spreads are apparently part of a volatility play in Cheniere Energy, which reached an all-time high yesterday .

First a block of 20,000 May 65 calls were bought for the ask price of $1.09 while 20,000 May 75 calls were sold for $0.16. Four minutes later, blocks of 26,000 traded at those two strikes for $1.18 and $0.25 respectively. Both transactions appeared to be vertical spreads.

Just after the first trade, 360,000 shares of LNG were sold for $57.65. Another 480,000 shares were sold for the same price after the second option trade.

In each case the stock position exactly offset the delta of the corresponding call spread. This means that the overall strategy is focused on volatility rather than a specific direction of the share price. (See our Education section)

LNG closed fractionally higher at $57.67 yesterday after hitting a record intraday high of $59.25. The liquefied natural-gas stock has more than doubled in the last year.
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