The number of Halliburton (NYSE: HAL) options traded more than doubled yesterday thanks to one bullish investor whose put sale trumped normal daily options volume by approximately 12,000 contracts.
More than 50,000 HAL options changed hands, compared to normal daily options volume of 23,000 contracts. The bulk of the volume traded in the January 2010 expiration month after an investor sold 35,000 in-the-money Jan. 22 puts for $4.45 per contract with the stock trading around $19 a share. The Jan. 22 puts, which were trading down 20 cents on the day, were home to open interest of 1,719 contracts. More than 36,400 of the Jan. 22 puts changed hands with more than two hours left to go in the trading day.
HAL did not announce any significant news that could have instigated heavy put selling activity. HAL shares could be rallying despite a drop in crude oil prices because of expectations for a better-than-expected earnings season, especially for stocks with above-average exposure to outperforming international markets. The company is scheduled to announce earnings figures on July 20, the trading day after July expiration.
HAL shares were trading up 30 cents to $19.23 – that’s 43% higher since reaching a 52-week low of $13.46 on Nov. 20, but the stock 63% from the 52-week high of $53.07 it saw on June 30 last year. The investor needs HAL shares to expire higher than $17.55 in order to make money on this trade ($17.55 is the breakeven point). Bullish investors do not necessarily want a big rally – they just need the stock to at least hold its current level. Given that this put sell was relatively long term and using in-the-money options, it is a little unusual but still points to moderate bullish sentiment from the investor.
Investors should not interpret heavy put selling as a reason to automatically buy HAL shares, which are currently outperforming the market. But investors who are bearish on HAL have a healthy supply of Jan. 22-strike puts on their hands.
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