Options News
$WMB bears triple their money
Williams has fallen with the price of oil, yielding exponential gains on downside option positions. On Jan. 18, Investitute’s proprietary programs flagged the purchase of 4,000 August $31 puts purchased for $1.64 with shares at $32.35. This was clearly fresh buying, as open interest in the strike was only 330 contracts befeore that session began. […]
Williams has fallen with the price of oil, yielding exponential gains on downside option positions.
On Jan. 18, Investitute’s proprietary programs flagged the purchase of 4,000 August $31 puts purchased for $1.64 with shares at $32.35. This was clearly fresh buying, as open interest in the strike was only 330 contracts befeore that session began.
Those puts were marked at $4.88 today, 3 times their purchase price. The stock dropped 19.3% in the same time period, underscoring how options can far outperform moves in their underlying shares.
Long puts lock in the price where a stock can be sold no matter how far it might drop, gaining value in a selloff with the potential for significant leverage. The contracts can be purchased either as an outright bearish bet or a hedge on a long-stock position.
WMB was down 1.1% to $26.12 today. The energy-pipeline operator has declined with other industry names in recent weeks as the price of crude has pulled back.