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Brigham trade is based on time decay

One big investor is looking to turn time into money with Brigham Exploration.

optionMONSTER's monitoring programs on Wednesday detected the sale of 7,787 January 2014 35 puts on the Texas-based energy company, which agreed to be acquired by Norway's Statoil last month. All of the contracts priced for $0.05.

The trade hinges on the acquisition proceeding as planned at the $36.50 negotiated price. If it does, then time decay will render those short puts worthless and the investor will keep the modest premium. But if something disrupts it, he or she will be forced to buy the stock at $35, which would probably result in hefty losses. (See our Education section)

BEXP rose 0.14 percent to $36.39 in Wednesday's session. Overall option volume was 6 times greater than average.

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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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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