Options Volume Soars as Golar LNG Limited (USA) (GLNG) Plunges

Golar LNG Limited (USA) (NASDAQ:GLNG) has lost one-fifth of its value this morning

Apr 29, 2016 at 10:37 AM
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Golar LNG Limited (USA) (NASDAQ:GLNG) is plunging, after DNB Markets downgraded GLNG stock to "hold" from "buy," and Evercore ISI cut its price target to $40 from $47. Additionally, it looks as if broken-down talks between oil firms Schlumberger Limited (NYSE:SLB) and Ophir Energy are exacerbating this negative price action, even though GLNG and SLB insist this has no impact on their partnership. Nevertheless, GLNG was last seen down 21.2% at $17.02 -- and on the short-sale restricted list -- with both stock and options volume in the top percentiles of their annual range.

By the numbers, more than 5 million GLNG shares have traded thus far. Meanwhile, in the options pits, 7,822 calls and 2,615 puts have changed hands -- 17 times the average intraday pace. Most active is the stock's January 2017 35-strike call, where it looks like new positions are being purchased, as traders bet on a big bounce through January options expiration.

Elsewhere, shorter-term traders are targeting GLNG's May 15 put. It appears as if some of the activity is of the buy-to-open kind, as put buyers gamble on a bigger retreat for the shares through the close on Friday, May 20 -- when front-month options expire.

More broadly speaking, options traders have shown a preference for calls over puts in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for instance, GLNG's 20-day call/put volume ratio sits at a top-heavy 4.54.

In the past 10 days, specifically, the equity's May 25 call has seen the biggest rise in open interest, with 3,707 contracts added. According to the major options exchanges, the majority of this action was at the hands of options buyers, meaning speculators expect a rally north of $25 by front-month options expiration.

On the charts, GLNG has shed more than half its value over the past 12 months -- and a recent attempt at technical redemption was quickly halted in the $24 region. What's more, thanks to today's bear gap, shares of Golar LNG Limited (USA) (NASDAQ:GLNG) are trading at levels not seen since late February.

GLNG daily chart April 29

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