Downside Purchased on Hercules Offshore (HERO)
Shares of Hercules Offshore (HERO) are trading lower on the session by 1.41%, trading at $4.90. The stock touched an intra-day high of $4.99 before pulling back into negative territory.
HERO has been flirting with the $5.00 level for the past week, forming what looks to be a bullish flag pattern; the trigger price is $5.03. A move through that level could have shares testing the $5.25-5.50 resistance level.
One trader is buying up protection on the name today. A short while ago, the October $5.00 put was purchased 1,708 times, on the offer, for $0.30. Open interest on the strike is only 341 contracts, indicating new positioning. The strike is currently bid $0.25, at $0.35.
Both implied and historical volatility have been falling over the past four months, currently registering 48% and 41% respectively. This is down from 84% and 89% in late-June.
At $0.30, the Oct $5 put traded at 58% vol, indicating that the trader is expecting an uptick in volatility over the next three weeks, perhaps in line with what was seen at the beginning of the quarter.
Hercules Offshore, Inc. provides shallow-water drilling and marine services to the oil and natural gas exploration and production industry globally. It provides these services to national oil and gas companies, integrated energy companies and independent oil and natural gas operators.
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