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


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

Premium Services

Education & Strategy

Vega

There is another Greek which measures the effects on an option's price buy changing the amount of extrinsic value in the option, and that Greek is Vega...

View more education articles »