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Denbury seen holding current levels

Chris McKhann (chris.mckhann@optionmonster.com)

Traders apparently believe that oil and natural gas company Denbury Resources will hold current levels.

optionMONSTER systems show that 4,100 DNR options have traded so far, compared to a daily average of 879. Almost all of that volume is in one transaction.

A trader sold 4,000 December 17 puts for the bid price of $1. This is clearly a new position, as the previous open interest has been just 18 contracts.

The put selling is a bet that DNR will remain above $17 through the end of this year. The trader is also taking on the risk of buying the shares on a drop below that level, but that may actually be part of the strategy. Traders sometimes sell puts with the hope of buying the underlying stock at a discount . (See our Education section)

DNR is off fractionally today at $17.47. Shares were above $19 at the high in May and were down below $17 briefly at the end of June.

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