OptionsHouse

Options Trading News

February 26, 2014  Wed 11:24 AM CT

PBR: SEE CHART GET CHAIN FIND STRATEGIES
A large trader is combining stock and options to create a volatility play in Petrobras.

The strategy involved 8,300 October 11 puts that were bought in one print for $1.29 on a wide bid/ask spread today, according to optionMONSTER's Depth Charge tracking system. This is clearly a new position, as the strike's previous open interest was a mere 21 contracts.

Less than a minute later, the biggest block of PBR stock traded with 365,200 shares going for $11.17. The combined trading creates a delta-neutral position that is focused on changes in volatility, not on the direction of the stock's price. Some traders choose to target volatility because they believe that it is easier to predict, especially around quarterly results. (See our Education section)

PBR is down another 1.68 percent to $11.14 this afternoon, a day after trading as high as $11.84 when earnings were released. The Brazilian energy giant was up at $18 in November but hit a 52-week low of $10.63 in the first week of the month.
Share this article with your friends


Related Stories

PBR

Cramer: Petrobras is a real worry

March 16, 2015

This onetime $350 billion company seems to be sinking toward oblivion. And if its $170 billion of debt collapses all at once, the redemptions for funds sitting with the paper will be horrific.

PBR

Cramer: Fears in Petrobras, Intel

March 13, 2015

Just because the dollar went down yesterday and retail sales were weaker--keeping the Fed's interest-rate hike at bay for a day--it doesn't mean that the dollar will keep strengthening.

PBR

More big put buying in Petrobras

March 5, 2015

Traders are buying puts for the second consecutive day in the Brazilian energy giant, which is nearing its 52-week low from early January.

PBR

Big downside trade hits Petrobras

March 4, 2015

The Brazilian energy giant plunged in mid-October after a major credit downgrade from Moody's and is down more than 34 percent in the last three months with the declining price of oil.

Invest Like a Monster - San Diego: June 26-27

TRADING WEEKLY OPTIONS

The fastest money in the market
View full report »

Premium Services

Free Webinar

Education & Strategy

Introduction to Theta

This week, we continue our discussion of the strike-based Greeks with Theta...

View more education articles »