What's behind calls in Plains Exploration


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One investor wants to give Plains Exploration & Production more room to roam.

optionMONSTER's tracking programs detected the sale of 2,870 February 35 calls for $2.54 and the purchase of an equal number of January 33 calls for $3.01. Volume was below open interest in January but not in February, which suggests that an existing short position was rolled from one strike to the other.

The trade was probably the work of an investor who owns shares in the Houston-based energy driller and was using the options as part of a covered call strategy. He or she would have sold the January contracts at a previous date to earn income. (See our Education section)

Adjusting the position cost $0.47 but gives the trader the right to sell shares for $2 more. He or she also agreed to stay in the trade for an additional month, so it's an example of how investors can turn time into money using options.

PXP rose 2.39 percent to $35.17 yesterday. It traded as low as $20.25 in early October, rallied back hard and has been consolidating between $31 and $37 since then.

Overall option volume was triple the daily average in the session, with calls outnumbering puts by 9 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.

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This article appears in: Investing , Options

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