Options Intelligence Report: United States Natural Gas ETF (UNG) & International Paper Co. (IP)
Natural Gas Options Trader Enacts Bullish Risk Reversal
UNG ñ United States Natural Gas ETF
Shares of the natural gas exchange-traded fund, which mirrors the price and performance of natural gas, are down 1.85% to $9.67 with just under one hour remaining in the trading session. Options traders initiated bullish plays in the March contract despite the dip lower in the price of the underlying shares.
It looks like one investor initiated a bullish risk reversal to position for a rebound in the price per UNG share by March expiration. The trader sold 8,250 in-the-money puts at the March $10 strike for a premium of $0.64 each in order to offset the cost of buying 8,250 calls at the same strike for $0.40 apiece. The trader pockets a net credit of $0.24 per contract on the reversal, which he keeps if shares of the fund trade above $10.00 by expiration day. Additional profits are available to the upside if and when the price per share exceeds $10.00 apiece.
IP ñ International Paper Co.
Global paper and packaging firm, International Paper Company, enticed bullish options traders to initiate optimistic positions in the March contract as shares of the underlying stock jumped 6% in late afternoon trading to $23.92.
Plain-vanilla call buying took place at the March $25 strike where upwards of 10,000 contracts were purchased for an average premium of $0.45 apiece. Call buyers stand ready to accrue profits should IPís shares rally another 6.40% over the current value of the stock to surpass the effective breakeven point on the calls at $25.45 by March expiration.
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