Volume Spike Investor

SandRidge Energy, Inc. (NYSE: SD) has just about never shown up in active screen alerts. Not in stock volume, nor in options. But…. We have now seen in the SEP08 $80.00 CALLS a total of some 31,371 contracts trade hands today and this was not in the options screens just an hour ago. On last look, this is now the most active call option volume of any stock today at the CBOE. These aren’t roll outs and aren’t closing trades either, because the open interest is only listed as 235 before this volume. This stock is down almost 4% today on 1.6+ million shares at 1:59 PM EST. This essentially matches its average daily volume. This options trade is so large in size that it looks like it may be more than all of the other contract open interest readings combined in the CALL options from now until September. The 52-week trading range on SandRidge is $28.50 to $68.88.

31,000 contracts is representative of 3.1 million shares on a fully leveraged basis. SandRidge is another oil and gas exploration and production company and its market cap is $9.6 Billion. This company has only been public since the end of 2007.

This sort of volume would leave one of two likely scenarios as the explanation. It sure looks like someone is making a large bet that something is going to happen over at SandRidge in the next 90 days. The price on this one may have actually been a sell but you never know if you are not the one involved in the trade, so before you go assuming that this means a major buyout or huge find it could be something as innocent as insider(s) collaring shares or something to that extent.

Jon Ogg
June 19, 2008