Options Trading News

February 15, 2012  Wed 2:32 AM CT

Weatherford has made a nice move, but now traders are apparently taking profits.

optionMONSTER's tracking systems detected the sale of 50,000 January 20 calls for $2.02 in a single print against open interest of just 8,344 contracts. It was one of the largest trades in the entire market yesterday and accounted for most of the option volume in the oil field-service stock.

The investor is now obligated to sell shares for $20 if they close above that level on expiration early next year. He or she probably owns the stock and is using the options to manage their risk.

WFT fell 2.07 percent yesterday to close at $17.47. The stock had rallied from below $13 in mid-December to above $18 last week. It seems to have rolled over around the same $18 level that was support back in July, which could be leading some chart watchers to believe that resistance is in place.

Even if Weatherford continues higher in the long run, it may first need time to consolidate its recent gains. Selling calls is a common way for shareholders to make money on their positions as they wait.

The company is also scheduled to report fourth-quarter results on Feb. 21, another consideration that favors the strategy. (See our Education section)

Overall option volume in the name yesterday was more than triple its daily average.
Share this article with your friends

Related Stories


Big put buying hits Weatherford

November 19, 2015

The oilfield-services provider rose after reporting mixed results on Oct. 21, but a large put buyer is targeting a time frame that covers the next quarterly release.


Weatherford sees downside trades

November 16, 2015

The oilfield-service provider reported mixed quarterly results on Oct. 21 and is now in the middle of a range that has been in place since the lows of September.


Short-term bulls like Weatherford

November 4, 2015

The oilfield-service provider has rallied 18 percent in the last month as energy names have rebounded, and traders are looking to ride the bullish momentum.



The fastest money in the market
View full report »

Premium Services

Education & Strategy

The art of trading

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.

View more education articles »