A trader is selling calls in Patterson-UTI Energy this morning as it dips going into earnings results tomorrow.
PTEN is down 1 percent to $14.87 today as it continues to fall since hitting resistance level at $15.50 last week. The oil and natural-gas driller, which was above $34 a year ago, hit a 52-week low of $12.81 in late June.
Today's option volume isn't huge but is dominated by the action in the August 16 calls. More than 2,000 of those calls have traded against open interest of 799 contracts this morning. Most of those calls traded across several exchanges in the same second, sold for the bid price of $0.35.
The options may have been sold naked with an initial bearish bet, but they were more likely traded against long shares as a covered call position. (See our Education section)
The trader is apparently thinking that the implied volatility of the call is too high. That volatility is 50 percent, while the 30-day historical volatility is 44 percent, just off six-month highs. The 10-day reading is 28 percent.
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