One investor is using options to manage risk in Superior Energy Services.
optionMONSTER's Depth Charge trade scanner detected the purchase of 6,850 September 22.50 puts for $0.60, plus the sale of 3,425 contracts each in the September 30 calls for $0.70 and the September 32.50 calls for $0.30. There was barely any open interest at any strike before the trade appeared, indicating that new positions were opened.
The trader probably owns shares in the provider of oilfield services and equipment. The downside puts ensure that he or she will get at least $22.50 per share in the event of a drop, while the short calls fix selling prices of $30 and $32.50 if it rallies. It cost $0.10 to implement the protective strategy. (See our Education section)
SPN rose 1.1 percent to $26.76 yesterday and is up 29 percent so far this year. It peaked around $30 early last year and gapped lower around $32.50 in September 2011. That could be leading some chart watchers to expect resistance around those levels and help explain yesterday's complex trade.
Total option volume was 78 times greater than average in the session, according to the Depth Charge.
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