Almost Carnival Time?

• Posted by Adam Warner
• on December 23rd, 2009

Time to pack up the Brazil truck? This from Schaeffers.

Petroleo Brasileiro (PBR: sentiment, chart, options) was the center of some heavy options trading yesterday, as more than 74,600 contracts changed hands. This leap in volume was more than double the security’s average single-sessions trading volume of 35,534 contracts, according to data from WhatsTrading.com. Furthermore, 64% of the volume crossed the tape on the call side.

Drilling down on the action in the front three months of options, we find that the January 36 call shed approximately 6,000 positions while the January 37.50 call lost roughly 7,000 positions. The January 39 call also saw its open interest decrease by 7,000 contracts, while the January 40 call dropped 8,000 positions. On the other hand, the January 46 put added 4,000 new positions.

As a result of this heavy call liquidation, the Schaeffer’s put/call open interest ratio jumped overnight from 1.12 to 1.25. This ratio indicates that put open interest outweighs call open interest among options slated to expire in less than three months.

Well, if you’re a contrarian sort, we have them reducing call positions, increasing in ITM puts, and RSI(2) in the tank. And hey, it’s Brazil, what’s not to love?

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