Unusual put strategy in Endeavor


A large and unusual put trade dominates today's option activity in oil and gas company Endeavor.

More than 6,300 END options have traded, which is more than three times the daily average over the last month. Almost all of that is in one trade in the September 5 puts.

optionMONSTER systems show that 6,000 September 5 puts were bought for $2.15, the ask price on a relatively wide bid/ask spread. The volume was about 20 times higher than the strike's open interest, so it is new position.

This in-the-money put buying is a bit odd in this case. The trader risks the $2.15 spent, and the maximum potential gain is $2.85, but only if the stock is worthless by September. Some traders do use in-the-money put buying instead of shorting shares, as the latter has potentially unlimited risk. (See our Education section)

END trades at $3.55, up 0.28 percent on the day. The stock was just shy of $4 at yesterday's high after the company released its fourth-quarter results. Shares were down at a low of $2.36 last Friday.

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