Pipelines have been hot lately, and Williams got a big vote of
optionMONSTER's tracking programs detected the sale of some 18,600
June 36 puts in volume that dwarfed the strike's previous open
interest of 336 contracts. Premiums fell from $0.78 to $0.69 as the
trades crossed, which illustrates the strong selling pressure.
The investor must buy shares for $36 if they're below that level on
expiration, which indicates they like the company and don't expect
a major drop. Should it remain above $36, they puts will expire
worthless and they'll keep the income received as profit.
is a common
strategy that makes money from the
passage of time
rather than a directional move. The trade has the benefit of
letting investors make money from a stock they believe in without
ever having to own shares. It also programs a buy order at a lower
price, eliminating the difficulty of building a position. (See our
section for more on how options can be used to manage trades.)
WMB is down 0.05 percent to $37.89 this morning and is now back
near its previous peaks from mid-2008. It's benefited from a steady
flow of money into pipeline companies as the United States regains
its place as a major player in the global energy market. Similar
companies, including Kinder Morgan, Energy Transfer Partners,
and Oneok, have also seen bullish activity this month.
Total option volume in WMB is about 2-1/2 times greater than
average so far today.
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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