Approach Resources is trying to climb, and one investor is
worried about a drop in the near term.
optionMONSTER's Depth Charge monitoring program detected the
purchase of about 1,700 October 30 puts for about $1.50. Equal
amounts were sold in the January 40 calls for $1.30 and the October
25 puts for about $0.20, resulting in a net cost of roughly zero.
The investor is probably hedging a long position in the
shale-energy company and will earn $5 if AREX falls from $40 to $35
in the next 5-1/2 weeks. He or she is also committed to sell the
position for $40 if the stock closes above that level at expiration
AREX, which rose 0.16 percent to $31.78 yesterday, peaked at $39.18
earlier this year. Domestic energy companies have been increasingly
popular among investors as advanced drilling technologies bring new
U.S. fields online and political tensions abroad reduce the appeal
of operating overseas. (See
for other companies in the space.)
Programming that exit at $40 makes sense because it would represent
a new high for the name and would be above the initial entry price.
section for more on the strategy, which combines elements of a
Total option volume in the name was 19 times greater than average
in the session.
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