Trade gives more time to Quicksilver
One investor wants to give Quicksilver Resources more time to rebound.
optionMONSTER's tracking systems detected the sale of about 20,000 June 6 puts for $1.07. An equal number of March 6 puts were bought at the same time for $0.68, but volume was below open interest in the strike. This suggests that they had previously been sold to earn income.
Given that KWK has failed to rally, the trader is rolling the position forward in time to avoid being forced to buy shares in the beaten-down energy stock at the end of next week. The investor collected a credit of $0.39 in the process but must also stay in the trade for an additional three months and remain exposed to downside in the stock.
KWK rose 5.22 percent to $5.44 on Friday. The oil and gas company's shares have lost more than half their value since last summer, when management announced a big capital spending plan. This year the stock has been holding its lows from March 2009, which could be leading some chart watchers to believe that it is finding a bottom.
If the stock rebounds, the options sold short will expire worthless and the trader will keep the credit received from selling the puts . (See our Education section)
More than 40,000 contracts traded in the name on Friday, about 23 times the average amount.
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