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Baker Hughes draws volatility play

Chris McKhann (chris.mckhann@optionmonster.com)

A large trader is looking for lower volatility in oilfield-services company Baker Hughes.

optionMONSTER systems detected the sale of 10,000 April 52.50 puts for the bid price of $2.43 yesterday. This is clearly a new position, as open interest in the strike was a mere 32 contracts before the trade appeared.

In the next 2 minutes, 360,000 BHI shares were sold for $55.6922. Combined with the short puts , this creates a delta-neutral trade that is looking for lower volatility rather than a specfic direction in the stock. (See our Education section)

The trade followed bullish activity picked up by our scanners several times this month.

BHI was up 0.81 percent yesterday to close at $56 even. The stock hit a two-year intraday high of $57.35 on Friday after gapping up from below $52 with strong quarterly results. It was below $47 in early September. 

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