Options Trading News

December 19, 2012  Wed 10:38 AM CT

As Cheniere Energy heads back toward its highs of the year, a large option trade is betting that the stock will hold recent gains.

optionMONSTER systems show that 5,000 June 15 puts were sold in less than a minute this morning, led by a print of 3,952 that went for $1. The volume dwarfed the strike's open interest of just 150 contracts at the beginning of the session, so this is clearly a new position.

The put selling is based on the thesis that LNG will be above $15 at the time they expire in six months. The trader will face the obligation to buy shares if they are below that strike price at that time, though the effective purchase price would be $14 including the credit from the put sale. (See our Education section)

LNG is up 1.34 percent at $18.20, on pace for its highest close since setting the four-year high of $18.74 in late April. Shares of the liquefied natural-gas company were down at support at $14 just over a month ago.
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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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