Options Buzz: Options Traders
Hunting for Upside in Oil Services
Plays
By Dan Colarusso
Staff Reporter
3/23/98 1:56 PM ET
Looking at oil today? Want to make an options play? Get
in line.
With three OPEC nations planning to cut production in an
attempt to maintain prices, the oil and oil services
companies shone in an otherwise dim market early today.
And, options traders, digging in after a sweet-as-pie,
cigar-at-the-close triple-witching Friday, made their plays
on the sector early and often. Market makers often try to
exploit high-profile situations such as the OPEC
announcement to juice premiums at the expense of slow
money. Today's action, though, is a continuation of
institutional interest in the sector that began last week.
"Friday was a big day, and it's all client-driven order flow,"
said one major firm options trader. "People are looking to
gain exposure to the group through the individual
companies and the index." The index is the Philadelphia
Stock Exchange Oil Services Index, which was up
7.58 to 115.76 midway through the session.
The OSX was the busiest index on the Philly floor this
morning, with volume high in both puts and calls. Among
the busier strike prices were the April 110 calls, which
recorded volume on 1,200 while rising 4 3/4 ($475) to 9
($900), and the April 120 calls, which also traded near
1,200 contracts and jumped 1 3/8 ($137.50) to 4 3/8
($437.50). Puts in the same strike price range were also
busy today, but premium on that side of the ledger was
sliding today.
Among the big oil services firms showing strength today
were Halliburton (HAL:NYSE) and Schulmberger
(SLB:NYSE). Both stocks were up more than 4 near
noon, and investors were chasing at-the-money and
out-of-the-money calls in both situations. Schlumberger,
which was trading at 78 1/8, saw volume in its April 80
calls run to 1,650. The price of the option moved 1 1/4
($125) to 2 3/8 ($237.50).
Halliburton got the same kind of attention from Chicago
options traders, who took volume on its April 55 and 60
calls to well over 1,000 contracts while the stock traded at
52. The price of the April 55s rose 5/8 ($62.50) to 1
($100), and the April 60s cost 3/8 ($37.50), up 5/16
($31.25) on the day.
Diamond Offshore (DO:NYSE), another popular oil
services stock, rose 2 1/8 to 49 3/16 as traders plowed
into its April 55 calls. Volume on the options was 1,024 at
12:30 p.m. EST. |
