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Kinder Morgan draws bearish activity

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Kinder Morgan is drawing some bearish activity ahead of its earnings report next month.

More than 4,000 April 35 puts were purchased yesterday, led by prints of 1,970 for $0.23 and 1,741 for $0.27 less than 20 minutes apart, according to optionMONSTER's Depth Charge tracking system. These are clearly new positions, as open interest in the strike was a mere 217 contracts before the session began.

KMI fell 1.31 percent yesterday to close at $36.97, right at its 50-day moving average. Shares of the energy-pipeline company gapped higher at the beginning of the year but have been trapped between $36 and $38 since then. The company will present at the Barclays Investment Grade Energy & Pipeline Conference this morning.

The puts bought yesterday were not tied to any stock activity identified by our scanners during the session, but they could be a protective hedge on a long position established earlier. If they were purchased in isolation, they are making an outright bearish bet that KMI will fall back below the $35 strike price to levels from the end of last year.

These options expire on April 19, two days after the company is scheduled to announce first-quarter results. So regardless of the reasons behind the puts--which lock in the price where shares can be sold no matter how far they might fall--the traders appear to have at least some concerns about that earnings report. (See our Education section)

Total option volume in the name exceeded 6,800 contracts yesterday, nearly 4 times its daily average for the last month. Overall puts outpaced calls by 2 to 1.

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