Bearish play hits Cheniere Energy


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Cheniere Energy bounced on Friday, but investors are afraid that it will keep sliding.

optionMONSTER's Depth Charge monitoring program detected the purchase of 12,500 February 38 puts for $0.51 and the sale of an equal number of February 35 puts for $0.13. Volume was more than 14 times the previous open interest at each strike, which indicates that new positions were initiated.

Known as a bearish put spread , the trade cost $0.38 and will inflate to $3 if the natural-gas transportation stock closes at $35 or lower by expiration on Feb. 21. That would be a profit of 689 percent from a 16 percent decline in the share price. (See our Education section for more on the leveraging potential of options.)

LNG rose 2.40 percent to $41.86 on Friday but is down 10 percent since the middle of January. It rocketed more than 20-fold between late 2009 and early this year, only to drop after stalling nears its 2006 highs.

Total option volume in the name was quadruple its daily average in the session, with overall puts outnumbering calls by almost 50 to 1.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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This article appears in: Investing , Options

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