Cautious trades in Weatherford

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Investors are taking no risks as Weatherford International hovers at a key level.

optionMONSTER's Depth Charge monitoring system detected the purchase of more than 5,000 November 15 puts for $0.40 to $0.43. Volume was almost double the previous open interest at the strike, indicating that new positions were initiated.

These puts lock in the price where shares can be sold in the oil-services company, providing holders with insurance against a pullback . The options can also be used to speculate on a drop without the unlimited risk involved in shorting the stock. (See our Education section)

Weatherford's next quarterly report is tentatively scheduled for Nov. 5 after the close, so the investor may want protection before that event. The name also saw bullish call buying on Sept. 9 and Sept. 19 .

WFT rose 1.22 percent to $15.74 on Friday and is up 41 percent so far this year. The company has been steadily advancing amid improving sentiment in the energy sector and is forecast to enjoy 41 percent earnings growth in 2013. Analysts see that rate accelerating to 57 percent rate next year.

Overall option volume was slightly above average in the name on Friday, according to the Depth Charge. Puts accounted for two-thirds of the total.





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: WFT

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