The bears are piling into Quicksilver Resources.
optionMONSTER's Depth Charge monitoring program detected the purchase of about 5,300 February 5 puts, most of which priced for $0.20. There was no open interest in the strike when the session began, so these are new positions.
The trades are highly bearish and reflect a belief that the debt-laden energy driller will continue to drop. It's lost more than half its value in the last six months and fell another 4.66 percent to $5.52 yesterday.
Most of the stock's decline occurred on Aug. 8, when KWK announced a big hike in capital expenditures and only a puny increase in production. Investors now seem to be worried that the company will continue to bleed cash amid steep price drops in the natural gas it sells.
The February 5 puts will appreciate rapidly if KWK continues to fall in the near term, with a break-even price of $4.80 on expiration.
Overall option volume was 9 times greater than average in the name yesterday, with puts outnumbering calls by 39 to 1.
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