Options Intelligence Report: Encore Energy Partners, LP (ENP) & Procter & Gamble Co. (PG)
ENP ñ Encore Energy Partners, LP
Shares of the owner of oil and natural gas properties rallied as much as 2.65% this morning to an intraday- and new 52-week high of $21.33. Encore Energy Partnersí shares are up ahead of its second-quarter earnings report, scheduled for release ahead of the opening bell on Thursday. One options player was well positioned to benefit from bullish movement in the price of Encoreís shares. It looks like the investor booked profits today by selling a previously purchased chunk of call options, and extended bullish sentiment on the stock ahead of earnings. The trader appears to have picked up 1,000 calls at the August $20 strike for an average premium of $0.25 each back on July 29 when ENPís shares closed at $19.64. The subsequent rally in the price of the underlying shares lifted premium on the now in-the-money calls, and allowed the investor to sell all 1,000 lots of August $20 strike calls today at the advantageous price of $1.14 apiece. Net profits on the transaction amount to an average of $0.89 per contract. Next, the bullish player prepared for ENPís shares to continue to appreciate ahead of August expiration by scooping up 2,000 calls at the higher August $22.5 strike for an average premium of $0.20 a-pop. The call buyer makes money on the new bullish stance as long as Encore Energy Partnersí shares rally 6.4% over todayís high of $21.33 to surpass the average breakeven price of $22.70 by expiration day. Options implied volatility on ENP is up 7.2% to 31.41% ahead of earnings.
PG ñ Procter & Gamble Co.
Investors are selling near-term call and put options on the maker of branded consumer products today, suggesting perhaps that they expect lower volatility in the price of its shares through August expiration. PGís shares surrendered 4.00% of their value on Tuesday after portions of its second-quarter earnings report disappointed analysts and investors alike. The stock recovered slightly during the current session, rebounding as much as 1.70% off yesterdayís low of $59.55 to reach todayís high point of $60.57. One trader appears to be selling a 5,000 lot August $60/$57.5 strangle at an average premium of $1.15 per contract. The investor keeps the full premium received on the transaction as long as PGís shares trade within the boundaries of the strike prices described through expiration day. Other options traders populating the August contract sold some 2,100 calls at the August $62.5 strike for an average premium of $0.11 each, and shed 2,700 puts at the lower August $60 strike for an average premium of $0.77 apiece. The sale of options at these strikes points to investorsí expectations PGís shares are not likely to rally above $62.50 or fall beneath $60.00 ahead of expiration this month. Options implied volatility fell 6.00% to 16.52% by 1:05 pm ET.
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