Energy Crash Thrills Brazilian Strangler
By Joe Springer:Brazilian energy titan Petrobras (NYSE:PBR) was tied to a tree and shot on Monday with shares hemorrhaging 8.98% to close at $17.84, and this was on good news.We set a hypotheitcal trade last week noting that rumors swirled that Brazil would allow increased fuel prices in their highly regulated markets. Well, Brazil announced modest increases of less than 10% last Friday and shares of PBR tanked. Some analysts were looking for 15% increases and the market clearly disapproved.Our trade, dubbed the Brazilian Strangler, was a bet that shares would move dramatically up or down from where they traded. We took a position in the Jan 2013 $18 put and $22 call. At the time both of these strikes were out of the money. The asking price for the call was $1.45, and the put was $1.46
(click to enlarge)
With the move to $17.84 the put is nowComplete Story »
- Original article
- Login or register to post comments
