One investor wants protection in Rex Energy with the stock at
its highest price in almost five years.
optionMONSTER's Depth Charge monitoring program detected the
purchase of 1,000 December 17.50 puts for $1.90 and the sale of an
equal number of December 15 puts for $0.75. The trader also sold
the December 20 calls for $1.48. Volume was more than quadruple
open interest at all three strikes, indicating that new positions
The strategy combines elements of a
to hedge a long position in the stock. He or she collected a credit
of $0.33 and stands to earn an additional $2.50 if the stock closes
at or below $17.50 on expiration.
The investor is probably using it to hedge a long position in the
shares, which are back to levels last seen in October 2008. He or
she has also agreed to forfeit any gains over $20 because they're
short calls. (See our
REXX fell 0.71 percent to $18.14 yesterday but is up 39 percent so
far this year. With its focus on the Marcellus and Utica shale
formations in Pennsylvania and Ohio, the company has benefited from
the renaissance of energy production sweeping the United States.
Revenue more than doubled between 2010 and 2012.
The three-way trade pushed overall option volume in REXX to 49
times greater than average in the session, according to the Depth
Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.