Cobalt Energy (CIE) is down $3.13 to $25.25 on high volume of 4.8 million shares after the Financial Times posted a negative article about the company yesterday (Spotlight Falls on Cobalt’s Angola Partner). The company is responding to the article today and strongly refutes any allegations of wrongdoing. Still, the stock is under pressure and levels of implied volatility in the options is up after 8,810 puts and 6,000 calls traded on the ticker, which is 3X the daily average. The flow has been in smaller sizes. The top trade is a 900 lot of May 22.5 puts on the $1.05 bid. 1,380 traded. Apri 25 puts, May 25 calls, and May 27.5 calls are the most actives. CIE was the subject of bearish order flow last week ahead of the Financial Times story (see 4/11 color). 30-day at-the-money implied volatility is up another 13 percent to 74 Monday morning.
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Frederic Ruffy is a well-known trader, writer, and strategist who has spent years educating investors and creating intelligent, insightful, unbiased market observations that are frequently cited by the Wall Street Journal and other financial publications. As senior analyst, Fred provides frequent and regular notes and daily updates for activity of interest.