Denbury draws bears near lows

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Denbury Resources has been weak, and traders apparently fear that it might get weaker.

optionMONSTER's Depth Charge monitoring program detected the purchase of more than 9,400 March 16 puts, most of which priced for $0.40. Volume was almost 4 times previous open interest at the strike, which indicates that new positions were initiated.

Puts lock in the price where a stock can be sold. Investors use them as insurance on shares they own or to speculate on a drop. (See our Education section)

DNR initially fell this morning but quickly reversed and is now up 0.92 percent to $16.44 in midday trading. The oil stock has been bleeding lower since late last year, hammered by weak production and analyst downgrades. But it seems to have double-bottomed around $15.60 and is now back above its 50-day moving average for the first time since early November.

Overall option volume is 11 times greater than average so far today, with puts accounting for 87 percent of the total.

Other energy names such as National Oilwell Varco, Murphy Oilm and Halcon Resources have been active recently, although in those cases we've cited bullish call buying .



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

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


This article appears in: Investing , Options

Referenced Stocks: DNR

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