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10:38PM (15 mins delay)
Oct 12, 2009 - 1:07 PM EDT
NBR – Nabors Industries Limited – Shares of NBR rose more than 4% during the trading session to $22.20 and attained a new 52-week high by noontime (EDT). It appears one option trader banked profits by unraveling a previously established bullish position on the land-drilling contractor. The investor originally sold 7,500 puts short at the November 17 strike price for an average premium of 63 cents per contract. Monday, the bullish trader bought back all 7,500 puts for 25 cents apiece. Thus, net profits on today’s closing purchase amount to 38 pennies per contract, or total gains of $285,000.
MGM – MGM Mirage, Inc. – Option traders invested in put spreads on MGM this morning, perhaps to lock in gains on the 2% rally in shares today to $12.52. One investor selected the November contract where he purchased 4,800 puts at the November 11 strike for 80 cents apiece, and simultaneously sold 4,800 puts at the lower November 10 strike for 45 pennies each. The net cost of the spread amounts to 35 cents per contract. The investor responsible for the spread is likely long shares of the underlying stock. If this is the case, the put spread protects the long stock position in case shares decline 15% to fall beneath the breakeven point to the downside at $10.65. Finally, the other put spread on MGM involved the purchase of 6,400 puts at the December 12 strike for 1.60 apiece, against the sale of 5,000 puts at the lower December 10 strike for 70 cents each.
Source: Seeking Alpha (Oct 12, 2009 - 1:07 PM EDT)
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