Bears Pounce as Emerge Energy Services LP (EMES) Bottoms Out

Emerge Energy Services LP (NYSE:EMES) touched a record low earlier

Sep 25, 2015 at 11:32 AM
facebook twitter linkedin


Emerge Energy Services LP (NYSE:EMES) has plunged 27.4% to trade at $8.54, after the oilfield services firm withdrew its full-year distribution forecast, citing weak demand and lower pricing in its sand and fuels unit. Additionally, the equity received downgrades from Stifel to "sell" from "hold," and Baird to "underperform" -- with the latter also cutting its price target in half to $7. In fact, the stock also panned a record low of $8.50, and was placed on the short-sale restricted list. Collectively, this has caught the attention of bearish option traders.

Diving right in, EMES puts are changing hands at 16 times the expected intraday rate -- and outstripping calls. Eleventh-hour bears are on the prowl. Specifically, buy-to-open activity has been detected at the weekly 9/25 8.50- and 9-strike puts, as speculators wager on the underlying to close below the respective levels at tonight's close, when the series expires. On the flip side, longer-term traders are buying to open the January 2016 12.50-strike call, counting on a rebound over the next four months.

These bulls are more reflective of the trend we've seen lately in EMES' options pits. The stock's 10-day call/put volume ratio across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is a top-heavy 7.63 -- registering in the 87th annual percentile. Moreover, EMES' Schaeffer's put/call open interest ratio (SOIR) of 0.30 sits south of 99% of comparable readings from the past 12 months, indicating short-term speculators have rarely been more call-skewed.

Such confidence is shocking, given Emerge Energy Services LP's (NYSE:EMES) technical performance. Since the start of 2015, the shares have plunged 84%. A capitulation among those bullish holdouts could exacerbate selling pressure on the stock.
 

Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 

 


 


 
Special Offers from Schaeffer's Trading Partners