One investor apparently wants more time to repair a losing trade
in Ultra Petroleum.
optionMONSTER's tracking programs detected the sale of 22,440
January 25 puts for $4.40 and the purchase of an equal number of
September 25 puts for $4.10. Volume was below open interest at the
shorter-dated strike, indicating that an existing short-put
position was closed and rolled forward in time.
obligates the investor to buy a stock at the strike price if shares
are below it on expiration. In yesterday's case, he or she
apparently sold puts at an earlier time when UPL was over $25,
looking for it to hold that level. But then the stock fell below
it, and the trader faced the prospect of being forced to get long
at an above-market price.
So the trader rolled the position forward in time, collecting an
additional $0.30 of premium and securing another four months for
the rebound to occur. The trade can still lose money if the stock
falls enough during that time. (See our
UPL rose 1.06 percent to $20.92 yesterday and has been churning in
a range for more than a year. It broke below $25 in early 2012,
bottomed around $15 last February, and has been working higher
since. The stock has been holding above its 200-day moving average
in recent months, which could make some chart watchers think that
it's due for a recovery.
Total option volume was 26 times greater than average in the
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