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Downside trade in Williams Partners

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Williams Partners is down sharply since reporting earnings last month, and one large trader is maintaining a bearish position in the natural-gas pipeline operator.

optionMONSTER's Depth Charge system on Friday detected the sale of 4,499 March 50 puts for $0.85 and the purchase of the same number of April 50 puts for $1.75. Volume was below the open interest in the March strike but above it in the April contracts.

This suggests that the March position was closed and rolled forward for a net cost of $0.90, allowing the investor to stay in the trade for another month. These puts, which lock in the price where WPZ can be sold no matter how far it might fall, are designed either as protection on a long stock position or as an outright bearish bet that the shares will drop before the options expire in mid-April. (See our Education section)

WPZ rose 0.49 percent to $49.37 on Friday, continuing to trade in an extremely tight range. The energy-infrastructure company hit resistance at the $54 level a month ago and then plunged after missing fourth-quarter earnings estimates, breaking below several key moving averages in the process. Its next quarterly report is scheduled for May 7.

Total option volume in the name was 13,388 contracts, more than 7 times its daily average for the last month.

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