Denbury seen holding current levels

optionMONSTER

Traders apparently believe that oil and natural gas company Denbury Resources will hold current levels.

optionMONSTER systems show that 4,100 DNR options have traded so far, compared to a daily average of 879. Almost all of that volume is in one transaction.

A trader sold 4,000 December 17 puts for the bid price of $1. This is clearly a new position, as the previous open interest has been just 18 contracts.

The put selling is a bet that DNR will remain above $17 through the end of this year. The trader is also taking on the risk of buying the shares on a drop below that level, but that may actually be part of the strategy. Traders sometimes sell puts with the hope of buying the underlying stock at a discount . (See our Education section)

DNR is off fractionally today at $17.47. Shares were above $19 at the high in May and were down below $17 briefly at the end of June.


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