Volume Spike Investor

Magellan Midstream Holdings, L.P. (NYSE: MGG) rarely makes the most active list of options trades. Back on June 17 we noticed what appeared to be an options roll-out trade on roughly 20,000 contracts from June to July in the $22.50 PUTS. We are now seeing this trade roll-out all the way to September (~60 days)

Below are the trades:
Contract/Strike       Volume OpInt
JUL08 $22.50 PUTS 20,000 20,257
SEP08 $22.50 PUTS 20,000 236

Without knowing the party making the trade, we can’t say whether or not this is insider(s) hedging or if there is a legitimate bet being made against the company. The stock itself has only seen 53,000 shares (10:58 AM EST) and this 20,000 contracts is representative of 2 million shares. It only trades an average daily volume of almost 200,000 shares. With shares down over 2% on light volume at $21.60, Magellan is close to making a run at the 52-week lows as the range has been $21.11 to $31.00.

Jon Ogg
July 16, 2008