ATPG – ATP Oil & Gas Corp. – Bearish trading in ATPG options is no surprise given the 9.05% decline in the price of the underlying shares to $10.96 this afternoon. Pessimistic players are out-and-about, targeting stocks engaged in the acquisition, development and production of oil and natural gas in the Gulf of Mexico, as President Obama’s six month moratorium on new offshore drilling and promises of tighter restrictions on the industry weigh heavily on the sector. Bears bracing for continued share price erosion for ATPG purchased at least 2,900 put options at the June $9.0 strike for an average premium of $0.36 apiece. Put buyers at this strike price make money if shares decline another 21.15% to breach the average breakeven price of $8.64 by expiration day next month. Long-term pessimists purchased a minimum of 8,000 puts at the January 2011 $5.0 strike for an average premium of $0.63 per contract. Investors long the puts are prepared to profit if shares of the oil and gas exploration company more than halve by expiration. ATPG’s shares must plummet 60.1% from the current value of $10.96 to break through the average breakeven point to the downside at $4.37 by expiration in January 2011. Investors also utilized call options to get bearish on ATPG. It looks like some traders shed roughly 4,000 calls at the June $12.5 strike to receive an average premium of $0.50 per contract. Call-sellers keep the full premium pocketed on the trade as long as shares do not exceed $12.50 ahead of June expiration. Options implied volatility on the stock is up 13.5% to 104.05% just before 12:40 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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