Kinder Morgan draws bearish activity


Kinder Morgan is drawing some bearish activity ahead of its earnings report next month.

More than 4,000 April 35 puts were purchased yesterday, led by prints of 1,970 for $0.23 and 1,741 for $0.27 less than 20 minutes apart, according to optionMONSTER's Depth Charge tracking system. These are clearly new positions, as open interest in the strike was a mere 217 contracts before the session began.

KMI fell 1.31 percent yesterday to close at $36.97, right at its 50-day moving average. Shares of the energy-pipeline company gapped higher at the beginning of the year but have been trapped between $36 and $38 since then. The company will present at the Barclays Investment Grade Energy & Pipeline Conference this morning.

The puts bought yesterday were not tied to any stock activity identified by our scanners during the session, but they could be a protective hedge on a long position established earlier. If they were purchased in isolation, they are making an outright bearish bet that KMI will fall back below the $35 strike price to levels from the end of last year.

These options expire on April 19, two days after the company is scheduled to announce first-quarter results. So regardless of the reasons behind the puts--which lock in the price where shares can be sold no matter how far they might fall--the traders appear to have at least some concerns about that earnings report. (See our Education section)

Total option volume in the name exceeded 6,800 contracts yesterday, nearly 4 times its daily average for the last month. Overall puts outpaced calls by 2 to 1.

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