Put spread hits Pengrowth Energy

optionMONSTER

Pengrowth Energy hit new highs yesterday, but a large trade is positioning for a pullback.

Total option volume in PGH topped 8,000 contracts yesterday, compared to a daily average of just 269 contracts in the last month. Almost all of that action was in one put spread.

optionMONSTER's Heat Seeker system shows that a trader bought 2,500 July 7 puts for the ask price of $0.90 and sold 5,000 July 6 puts for the bid price of $0.30. Volume is above the previous open interest in each strike, indicating new activity.

This ratio spread cost the trader $0.30, which is the amount at risk if PGH is above $7 at expiration in mid-July. The maximum gain on the trade would come if the stock is right at $6 at that time. (See our Education section)

PGH rose 0.91 to $6.62 yesterday, a new 52-week high. Shares of the Canadian oil and natural-gas company were below $6 last week.

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