Quicksilver traders bet on turnaround


Shutterstock photo

The bulls are wagering that Quicksilver Resources is finally ready to turn around.

optionMONSTER's Heat Seeker tracking system on Friday detected a surge of call buying in the beaten-down energy company, which has lost more than half its value in the last six months. Most of the activity focused on the February 6 contracts, which changed hands late in the session for $0.15 to $0.30.

Volume exceeded 15,000 in the strike, nearly 6 times previous open interest. The March 6s were also bought nearly 5,000 times for $0.35 to $0.40.

KWK pushed higher as the option trades crossed, closing up 3.32 percent to $5.29. The stock has plummeted since announcing a big capital-spending plan in August, which led investors to believe that Quicksilver will continue bleeding cash.

The oil and gas producer is also facing worries about lower selling prices as cheap natural gas from domestic shale fields floods the market. Carbo Ceramics and RPC, which provide so-called fracking services, both warned of slowing capital expenditures in the industry.

Given that backdrop, Friday's call buyers apparently think that it's a good time to place contrary bets in favor of KWK. Short interest exceeds 20 percent of the float, and the shares are at their lowest level in almost three years--factors that could support a rebound. (See our Education section)

Overall option volume was 22 times greater than average on Friday, with calls outnumbering puts by 19 to 1.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.

This article appears in: Investing , Options

More from optionMONSTER




Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by BankRate.com