Cheniere Energy has had an amazing run, and now investors think
it might be running out of gas.
optionMONSTER's Depth Charge monitoring system detected the sale of
14,000 September 31 calls for $0.58 and the purchase of an equal
number of September 20 puts for $0.48. Volume was more than 5 times
open interest at both strikes, indicating that new positions were
Owning puts ensures a minimum sale price, in this case $20, while
writing calls obligates the trader to unload shares at a maximum
level, in this case $31. He or she probably owns the natural-gas
tanker's stock and is using the strategy, which is known as a
, for protection.
LNG is down 0.87 percent to $26.21 in afternoon trading but has
appreciated more than 700 percent in the last three years. It's
been ripping higher as the company prepares for a boom in
natural-gas exports from the United States. But its momentum has
been slowing in recent months, which could be leading some chart
watchers to believe that the stock is losing its mojo.
The collar lets the investor time a potential exit until
September--possibly for tax purposes--while staying in in the game
for new highs LNG rebounds. (See our
section for other hedging techniques.)
Total option volume in the stock is quadruple the daily average so
far today, according to the Depth Charge.
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