PBR – Petroleo Brasileiro SA – Options investors populating the Brazilian supplier of crude oil and oil products initiated a mixture of bullish and bearish strategies on the stock today with PBR shares lower by 1.50% to $37.74 as of 12:45 pm (ET). One pessimistic trader purchased a plain-vanilla debit put spread in the June contract. The investor picked up approximately 2,250 puts at the June $37 strike for an average premium of $0.32 apiece, and sold roughly the same number of puts at the lower June $35 strike for an average premium of $0.06 each. Net premium paid for the bearish spread amounts to $0.26 per contract, thus positioning the responsible party to make money should shares of the underlying stock decline 2.65% from the current price of $37.74 to breach the average breakeven price of $36.74 by expiration on Friday. Maximum potential profits of $1.74 per contract are available to the put-spreader if PBR’s shares fall 7.26% to trade beneath $35.00. Options action in the July contract, however, paints a rosier picture for Petroleo Brasileiro SA’s share price. It looks like one or more bullish investors sold a total of 10,000 puts at the July $35 strike to pocket premium of $0.95 per contract. Put sellers keep the full premium received on the transaction as long as PBR’s shares trade above $35.00 through expiration day in July. Investors short the puts are apparently willing to have shares of the underlying stock put to them at an effective price of $34.05 in the event the put options land in-the-money at expiration. The overall reading of options implied volatility on the stock is up 5.7% to 44.26% as of 12:56 pm (ET).
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Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
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