Friday, September 3, 2010

Mariner (NYSE:ME) Puts Soar on Rig Explosion Reports

With BP (NYSE:BP) fresh in the minds of traders, they were like sharks attracted to blood with Mariner Energy (NYSE:ME) puts, as news of their oil rig having an explosion and a resultant fire generated a feeding frenzy.

The highest amount of interest was with the September $20 strike, with over 21,000 lot changing ownership by 1:15 PM EDT.

At a glance, it looked like traders were buying and selling at a pretty comparable rate. The average premium was $0.86 each.

A little over 9,000 of the puts sold at that strike were probably the result of traders who engaged in panic buying earlier in the trading day.

The premium on September $20 strike puts soared as high as $4.30, once the share price of Mariner Energy dropped to their lowest after the news came out of the accident. At that price traders selling a little later would have only get $0.40 a contract.

Another approximate 2,400 puts were acquired at the September $22.5 strike, with the average premium being $1.28 each.

Conflicting and slow reports added a lot of fuel to the fire, and we're still waiting for a clear story as to what happened and the extent of the damage.

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