Bearish play in Continental Resources

By David Russell,

Shutterstock photo

Hope is fading of a rally in Continental Resources this year.

optionMONSTER's tracking programs detected the sale of 1,467 December 75 calls for $1.35 against open interest of just 1,393 contracts, indicating that a new short position was opened. The investor bought 1,467 November 85 calls at the same time for $0.05, but volume was below open interest in those.

This suggests that the investor was previously short the 85s and closed the trade. Starting a new short position in the December contracts brought in more income and lowered by $10 the price where they must sell shares in the Oklahoma wildcatter.

CLR rose 0.48 percent to $68.71 yesterday but has lost 18 percent of its value in the last two months. The stock had peaked at an all-time high over $97 in February 2011 but has been working its way lower since. It now seems to be consolidating below its 50- and 200-day moving averages, which could be leading some chart watchers to believe that it's turning bearish.

Selling calls is similar to shorting the stock but lets the investor capitalize on the natural process of time decay . It also includes big risks if a rally ensues. (See our Education section)

The trade pushed total option volume in CLR to almost twice the daily average.

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

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.

This article appears in: Investing Options
Referenced Stocks: CLR

More from optionMONSTER




Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by