One investor is using options to manage risk in Approach
Resources, which is up 67 percent in the last three months.
optionMONSTER's systems show that a block of 3,200 April 35 calls
was sold in the Texas-based shale-energy company for an average
premium of $3.17. An equal number of January 30 calls were bought
at the same time for $3.08. Volume was below open interest in
January but not April, which suggests that a short position was
rolled from one strike to the other.
The investor probably owns AREX stock and has been using the
options as part of a
strategy, which reduces the cost of the trade but also limits its
gains. By adjusting the position yesterday, he or she generated
$0.09 of income and now stands to make an additional $5 on the long
stock. The trader also received a credit when the calls were first
sold, which would have reduced the cost of the shares.
closed at $31.28 yesterday, up 7.79 percent. Shale-energy names
have been one of the strongest groups this year as new drilling
technologies allow exploitation of cheap deposits that had been
previously inaccessible. (See
Overall option volume in AREX was 7 times greater than average in
yesterday's session, according to the Heat Seeker, with calls
outnumbering puts by 76 to 1.
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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