Cheniere Energy Inc. (NYSE: LNG, $67.05) is a Houston, Texas-based company involved in the development and sale of natural gas resources. The stock has been excellent for investors thus far in 2014, returning in excess of 55% year to date. The stock has traded in a 52-week range of $38.42-$85, but has pulled back of it’s September 18 all-time high.
With natural gas coming under similar pressure to what we’ve seen in crude, at least one trader is betting LNG will continue it’s reversal. Early in Monday’s session, OptionHacker flagged an order of 2,500 LNG Dec12 Weekly 66 Puts bought for $0.61. With the potential to control 250,000 shares, this represents nearly one third of the daily float.
Following this order, the stock sold of sharply and this line of puts traded as high as $2.05, making this an extremely profitable trade in a matter of hours. With today’s sell-off offering respite for crude and natural gas bulls, LNG stock is up and these puts are now trading around $1.30.
Those still wishing to take a short-term bearish view in LNG could consider spreading the 66 strike puts and selling the 64.5 line to put on a bear put spread.
My Trade:
- Buy the LNG Dec12 Weekly 66-64.5 Put Spread for $0.55
- Risk: $55 per 1 Lot
- Reward: $145 Per 1 Lot
- Break-even stock price at expiration: $65.45
Greeks of this trade:
