Endeavour Earnings and Europe

Endeavour International Corporation (NYSE: END, $5.12, up $0.26) is an oil and gas company specializing in the exploration, development, and acquisition of energy resources, with operations concentrated in the continental United States and in North Sea area of the United Kingdom.

Shortly after 1 PM CST in Monday’s session, we saw a trader come in and buy 40,000 END Sept 5 Calls for $1.30.  With the potential to control 4 million shares of stock (4 times daily stock volume) should the contracts be in-the-money at September expiration (9/20), this order represents a $5.2 million dollar investment to the LONG side.   END has an average float of about 615,000 shares, and had already traded over 1 million shares Monday with an hour remaining in the session (1.62 mm final volume).

For this trade to be profitable at expiration, END stock must be trading above $6.30 if held until expiration.  The market on the END Sept 5 Calls is currently $1.50-$1.55, meaning this trader is up about $800,000 since opening his or her position.  Following this massive order, we saw END stock ($5.10) spike over $0.30.

Endeavour International is scheduled to report earnings before the opening bell on Wednesday (3/5).  As geopolitical concerns surrounding the Ukrainian conflict and the potential for Russian military intervention on the Crimean Peninsula heighten, oil futures are up over $2 and CBOE’s OVX (Crude Oil Volatility Index) is up $2.19, trading $20.90.  This trader’s speculation to the upside could be possible speculation as to the Ukrainian situation, or regarding some news on the earnings call.

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Andrew Keene

keeneonthemarket.com

Andrew Keene was an independent equity options trader on the Chicago Board Options Exchange for 11 years. He spent most of that time as a market maker in over 125 stocks, including Apple, General Electric, Goldman Sachs, and Yahoo. From 2006-2009, Andrew was the biggest, independent on-the-floor Apple trader in the world…