Friday, 11 June 2010

BP - Buying Puts?

The BP share price seems to be generating almost as much interest in the sports oriented blogging world as the World Cup. BFAL appears to have taken my advice for a quick dip into the market for a profit. Perhaps when he’s finished looking at his 2010 Panini World Cup sticker album, he’ll get around to sending me a small percentage. Or perhaps not. (Some of us still have our 1970 album and Esso World Cup coin collection...)

A nice jump in the price today, but I’m not convinced they are a value play any more. Implied Volatility (IV) jumped about 45% today up to 95 with put option volume very high at some very low strikes. Not only in the longer term dates, but some in June. For July, the open interest in the US market at the $12.50 strike has traded over 12,000 contracts, up from just 350. There may be a leak... someone knows something.

As I have written before about share trading, plenty of insiders know far more about these things than I do, and day-trading is a losing proposition for the likes of me. BP shares are a big gamble right now, and I have no edge. It’s fascinating to watch from the sideline though.

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