PCX – Patriot Coal Corp. – Coal producer, Patriot Coal Corp., attracted bullish options investors during the session with the value of its shares rallying as much as 4.65% in morning trading to touch an intraday high of $11.69. Positioning in PCX calls across several expiries today suggests some traders are hoping to see the price of the underlying stock continue to rebound. Patriot’s shares, using today’s high of $11.69, are still down 51.8% since April 26, 2010, when the stock reached its 52-week high of $24.25. Bulls hoping to see the coal company’s shares extend gains picked up at least 3,250 calls at the September $12 strike for an average premium of $0.28 each. Call buyers are poised to profit should PCX shares rally another 5.05% to trade above the average breakeven price of $12.28 by expiration day next week. More than 7,240 calls changed hands at the September $12 strike by 1:30 pm ET versus previously existing open interest of 3,113 lots. Optimism spread to the October $12 strike where another 1,000 calls were purchased for premium of $0.72 a-pop. Investors looking for a more significant upward shift in share price scooped up 1,000 calls at the higher October $14 strike for an average premium of $0.25 apiece. Traders holding these contracts make money if the coal producer’s shares jump 21.9% over today’s high of $11.69 to surpass the average breakeven point at $14.25 by October expiration. Shares last traded above $14.25 back on June 23, 2010. The increase in demand for call options on the stock earlier boosted Patriot’s overall reading of options implied volatility 8.78% to an intraday high of 65.48%.
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