Odd trade bets Walter will plummet


An unusual trade is apparently looking for shares of Walter Energy to collapse by early next year.

optionMONSTER systems show that 5,000 January 5 puts were bought for $0.16. This is a new position, as there was no previous open interest in the strike.

These options have a delta of just 0.02 , which means that there is only a 2 percent probability that the stock will be below the $5 strike price at expiration in mid-January. It also means that the puts will make just $0.02 for every $1 that WLT falls.

The contracts do not appear to be tied to any stock as part of a larger strategy, and no one would hedge with puts that far out of the money . So this appears to be an outright bearish bet that Walter will plummet below $5, to a level not seen since September 2003. (See our Education section)

WLT closed yesterday at $17.66, down 1.45 percent on the day. The coal miner was at a low of $16.24 last week but above $40 in late February and just shy of $70 a year ago.

More than 20,000 WLT options changed hands yesterday, about twice its daily average.

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