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Front-month call buyers are targeting LinnCo LLC (LNCO)
After an initial plunge, LinnCo LLC (NASDAQ:LNCO) shares are up 2.4% at $10.62. What's more, calls are once again active on the security, with traders taking a shine to front-month contracts.
On Wednesday, twice as many calls as usual were exchanged, and the stock's 30-day at-the-money implied volatility rose 3.9% to 89.1% -- signaling elevated demand for short-term strikes. Digging deeper, LNCO saw buy-to-open activity at the January 2015 9-strike and 10-strike calls, where more than 3,000 total contracts crossed the tape. In short, these traders anticipate the oil-and-gas stock will continue to rebound north of the aforementioned strikes through the close on Friday, Jan. 16 -- when the front-month options expire.
Today, calls are again crossing at twice the average intraday rate, with potential buy-to-open activity detected at the January 2015 9- and 12-strike calls. As alluded to earlier, LNCO is muscling higher even after subsidiary Linn Energy LLC (NASDAQ:LINE) slashed its 2015 capital budget by 53%, and more than halved its annual dividend.
Of course, this recent rally represents a change of pace for LNCO. Year-over-year, the shares have shed nearly two-thirds of their value, and even today's upside move is being contained by the equity's descending 20-day moving average.
Finally, recent activity notwithstanding, options traders have been relatively bearish of late. LinnCo LLC's (NASDAQ:LNCO) 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.76 ranks in the 89th annual percentile.