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.