Options Trading News

October 11, 2012  Thu 2:45 AM CT

Traders are positioning for a potential drop in Petrobras as a recent rebound by the Brazilian oil giant continues to lose steam.

optionMONSTER's Depth Charge tracking system detected the purchase of 2,589 November 20 puts, nearly all of them in two prints of 1,500 and 1,000 that went for $0.22. The volume far outstripped open interest of 536 contracts in the strike at the beginning of the day, indicating fresh buying.

PBR slipped 0.75 percent to $22.48 yesterday as shares continue to drift lower since climbing near $25 on Sept. 14. The stock has been fighting its way higher since plunging from a 52-week high of $32.60 in early February to $17.27 in late June.

Our systems did not identify any stock trades tied to the option activity yesterday, but the puts could have been bought to protect long positions established earlier. If not, the trades are making a straightforward bet that PBR will fall more than 12 percent by expiration in about five weeks. (See our Education section)
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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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