Trader is hoping Ensco will hang on

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Someone thinks that Ensco is down but not out.

optionMONSTER's trade scanners detected the purchase of 1,436 October 57.50 puts for $2.90 and the sale of an equal number of November 57.50 puts for $3.25. Volume was below open interest in the nearer-dated contracts, indicating that an existing short position was closed and rolled forward in time.

The investor probably sold puts in ESV when it was trading at a higher level, hoping to keep the premium. But then it fell below $57.50 and now they face the obligation to buy shares above the current market value.

Adjusting the position gives them an additional month for the offshore-drilling company to rebound, while also providing him or her with an incremental $0.35 of income. (See our Education section)

ESV was up fractionally at $54.81 yesterday but is down 8 percent in the last three months. It's significantly lagged the broader energy space and other oil servicers during that time.

Total option volume was more than twice the daily average in the name.




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.

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


This article appears in: Investing , Options

Referenced Stocks: ESV

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