Options Brief: McMoRan Exploration (MMR)

MMR – McMoRan Exploration Co. – Investors didn’t stick around to ask many questions following the seventh consecutive quarterly loss at this oil and gas explorer. McMoRan specializes in ultra-deepwater exploration in search of oil and gas, which of course is not the most popular of investments targets following the Gulf of Mexico spill in April. McMoRan emphasized that it doesn’t operate in this segment but does operate in a high-risk operation some 10 miles off the Louisiana coast in the Davy Jones shelf exploration. A 23-cent per share loss compares to $1.40 a year ago with the company citing a 12% boost to revenues coupled with higher prices. Still, investors were unimpressed and sent shares almost 6% down to $10.16. Notable put options activity occurred at the $9.00 strike in the November contract, with volume of 4,300 lots comparing to existing open interest of one-tenth of today’s trading activity. Investors paid a premium of $1.13 to preserve rights to sell the shares at the fixed price of $9.00 by expiration after the next earnings cycle. Already the same selling rights have jumped to a 10% premium as pressure piles on the company in an unfavorable climate. Options implied volatility remained at 70% post earnings.

About Andrew Wilkinson 1023 Articles

Affiliation: Interactive Brokers

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.

Interactive Brokers: Interactive Brokers offers direct market access to around 80 electronic global markets from a single account. Successful traders and investors understand that superior technology and lower trading costs can result in greater returns. For 32 years we have been building direct access trading technology that delivers real advantages to professionals worldwide. With consolidated equity capital of US $4.4 billion, IB and its affiliates exceed 1,000,000 trades per day. In addition, our prudent and conservative risk policies make Interactive Brokers a safe haven for your money. Discover some of the reasons why IB, the largest independent US broker/dealer, is the professional traders' and investors' choice.

Visit: Interactive Brokers

Be the first to comment

Leave a Reply

Your email address will not be published.