Options Intelligence Report: Moody's Corp. (MCO) & Quicksilver Resources Inc. (KWK)

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MCO ñ Moodyís Corp.
Investors engaged in frenzied put buying behavior today given the 6.4% collapse in the price per share of the ratings agency to $27.75. Even with expiration looming for April contract options, investors opted to shell out premium to take ownership of puts. Bearish players purchased at least 2,400 now in-the-money puts at the April $28 strike for an average premium of $0.27 each. Traders long these contracts make money if Moodyís share price slips beneath the average breakeven point to the downside at $27.73.

Buying interest continued at the lower April $27 strike where pessimists paid an average of $0.14 apiece to pick up 2,700 put options. These contracts expire worthless unless Moodyís shares drop beneath $27.00, and investors do not turn a profit unless shares decline another 3.2% to breach the average breakeven price of $26.86, ahead of expiration.

Uber-bearish players purchased a minimum of 3,200 puts at the May $25 strike for an average premium of $0.52 apiece. Investors long these put contracts are prepared to profit should Moodyís shares plummet 11.8% from the current price of $27.75 to breach the effective breakeven price of $24.48 by May expiration day. Options implied volatility exploded during the first half of the trading day, and currently stands 52.5% higher at 49.84%.

 


KWK ñ Quicksilver Resources Inc.
The independent energy company engaged in the exploration, development and production of natural gas and oil in the U.S. received a near-term vote of confidence by one options investor today even though its shares surrendered 4.2% during the first half of the session to stand at $14.10. The optimistic options player displayed bullish sentiment on the stock by selling 7,000 puts short at the May $14 strike in order to take in a premium of $0.75 per contract.

Premium pocketed on the put sale is safe in the investorís wallet as long as Quicksilverís shares trade above $14.00 through May expiration day. Put-selling in this case indicates the trader is happy to have shares of the underlying stock put to him at an effective price of $13.25 each in the event that the put contracts land in-the-money at expiration.

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