Monday, March 3, 2014

Endeavour Int'l (END) - Gargantuan Call Trade Ahead of Earnings

END is trading $5.14, up 5.8% with IV30™ down 0.3%. The Symbol Summary is included below.

Provided by Livevol

Endeavour International Corporation (Endeavour) is an independent oil and gas company engaged in the exploration, development and acquisition of energy reserves in the United States and United Kingdom.

This is a quick order flow note... but I'm talking about HUGE order flow...

END has earnings due out on 3-5-2014 BMO, but the trade that caught my eye was in the Sep options.  let's start with the Stats Tab, below:

Provided by Livevol

Note that the firm averages 662 calls traded daily and nearly 44,000 have traded today alone.  Further, the total average open interest in calls (that's all strikes, all months, all calls) is 35,573.

So what happened?... Here you go, check out the Options Tab, below:

Provided by Livevol

In a single trade, 40,000 Sep 5 calls traded for $1.30... yup, 6000% of the daily average and larger than the entire existing open interest in calls.  Those calls are now $1.50 bid.

Those 42,000+ calls in total that have traded give the owner the right to purchase 4.2+ million shares.  END has 46 million shares outstanding... Or, in English, this option trade gives the owner the right to own almost ~10% of the company.

Can END go higher than $5?... The Charts Tab (two-years) is below. The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue vs HV180™ - pink).

Provided by Livevol

We can see that this was a $13 stock less than two-years ago...

That's all I know.  I don't usually follow order flow, and I'm not in this case either.  But... if this firm ends up ripping on earnings, someone is going to get an uncomfortable call from a regulator I'm guessing.

This is trade analysis, not a recommendation.

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