Williams singled out for volatility pop

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Williams reports earnings this week, and one investor is looking for a big move.

optionMONSTER's tracking systems detected the purchase of 7,000 June 32 calls for $2 and 7,000 June 28 puts for $0.20, resulting in a total cost of $2.20. Volume was more than 4 times open interest in both strikes.

The trade, known as a long strangle, will profit from the natural-gas stock ripping higher or dropping sharply. It's a common strategy when investors expect a news event to cause a spike in volatility. (See our Education section)

WMB rose 0.74 percent to $33.41 in morning trading. The shares have rallied 54 percent in the last six months as investors pour into the natural-gas sector, and today hit their highest price since July 2008.

The company will publish results after the bell on Wednesday. Its last earnings report on Feb. 17 crushed estimates, and management added fuel to the fire by announcing it would split its exploration and pipelines businesses into separate companies.

The strangle trade pushed overall option volume in WMB to twice the daily 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.

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


This article appears in: Investing , Options

Referenced Stocks: WMB

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