SWN – Southwestern Energy Co. – Shares of the independent energy company engaged in natural gas and crude oil exploration, development and production in the U.S. increased as much as 5.7% this morning to touch an intraday high of $35.78. SWN’s shares may have been helped higher by news that EXCO Resources’ CEO, Douglas H. Miller, proposed to the firm’s Board of Directors intentions to purchase all outstanding shares of the company he does not already own for $20.50 a share in cash. Shares are currently up 4.75% to stand at $35.45 as of 11:40 am in New York. Options traders hoping to see Southwestern’s shares continue higher in the next several months picked up calls on the stock today. Near-term bulls purchased approximately 1,100 calls at the November $36 strike for an average premium of $0.81 each. Call buyers at this strike make money if SWN’s shares rally another 3.8% over the current price of $35.45 to surpass the average breakeven point on the calls at $36.81 by November expiration day. Medium-term optimists appear to have purchased the majority of some 4,100 calls that changed hands at the January 2011 $38 strike for an average premium of $1.33 a-pop. Investors long the calls profit if shares jump 10.9% to trade above the average breakeven price of $39.33 by January 2011 expiration. Southwestern’s overall reading of options implied volatility is up 9.5% to stand at 34.26% as of 11:45 am.
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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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