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December 19, 2012  Wed 10:38 AM CT

LNG: SEE CHART GET CHAIN FIND STRATEGIES
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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Education & Strategy

Gamma

As we continue to discuss the Greeks, we come to the first of the strike based Greeks called Gamma. Gamma is known as the second derivative, while delta is the first.

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