Bearish bets in two energy names
Energy producers Denbury Resources and Atwood Oceanics drew bearish option trading yesterday.
optionMONSTER's Depth Charge system detected the purchase of 7,000 June 8 puts in oil and gas producer Denbury for the ask price of $1.25. This is clearly a new position, as open interest in the strike was just 718 contracts before the trade appeared.
Earlier in the session, offshore driller Atwood saw more than 2,100 April 30 puts bought for $2.40 to $2.86. Previous open interest in that strike was a mere 59 contracts.
Long puts lock in the price where the stock can be sold no matter how far it might drop, gaining value in a selloff. Although they can be used to hedge long positions , traders often use in-the-money puts such those in DNR and ATW to make bearish bets as a safer alternative to shorting the stock. (See our Education section)
DNR fell 5.66 percent to $7.50 yesterday and has lost more than 12 percent in the last month. ATW dropped 6.15 percent to $27.60 and is down nearly 15 percent in the same period.
Total option volume in DNR topped 9,200 contracts yesterday, more than 6 times its daily average for the last month, with overall puts outpacing calls by about 9.5 to 1. ATW volume was 7 times its average, with puts outnumbering calls by 37 to 1.
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