Put seller sees floor in Quicksilver

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The bears drove Quicksilver Resources lower today, prompting one big investor to take the other side of the trade.

KWK Chart optionMONSTER's tracking systems detected the sale of 7,000 May 14 puts on the company, which extracts oil and natural gas from unconventional deposits. The trade priced for $0.75 and pushed volume in the strike to 40 times greater than average.

KWK is down 4.14 percent to $14.11 in afternoon trading as it continues to fluctuate in an increasingly tight range that has persisted since October. The shares have been making incrementally higher lows, a trend that today's put seller apparently expects to continue.

The position reflects a belief that further downside in the stock is limited from these levels, but because of the premium earned the trade will make money as long as KWK stays above $13.25 by expiration.

The strategy will also benefit from the quickening pace of time decay that will occur as expiration approaches on May 21. A similar large put sale took place in January, though that trade apparently lost money.

KWK, which reported better-than-expected revenue and earnings on March 1, is scheduled to release its next results on May 10. Overall options volume in the stock is almost 5 times greater than average so far today, with the put sale accounting for 96 percent of the activity.

(Chart courtesy of tradeMONSTER)



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.

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This article appears in: Investing , Options

Referenced Stocks: KWK

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