Unusual Options Activity: Petroleo Brasileiro (PBR)

Petroleo Brasileiro (PBR), also known as Petrobras, is flat over the past year as energy prices have been volatile, but well off of 2022’s highs. One trader is betting on a move higher in the coming weeks.

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  • That’s based on the October $11 calls. With 58 days until expiration, 6,553 contracts traded compared to a prior open interest of 114, for a 57-fold rise in volume on the trade. The buyer of the calls paid $2.70 to make the bullish bet.

    Shares recently traded for about $13.70, or about $2.70 in-the-money, indicating that this option has no time premium now.

    Petrobras has had some price spikes to the $15 range in the past few months. Such a move higher could send the option to $4, for a potential 48 percent profit.

    While the share price has struggled in the past year, investor concerns over Brazil has led to the market valuing shares at less than 3 times earnings. And at the current dividend payout, shares yield a massive 26 percent.

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  • Action to take: Shares look like one of the most undervalued plays in the energy sector right now. Investors can also get a slight bargain on the price here, as shares went ex-dividend on August 22.

    For traders, shares have been gradually trending higher in the past few months. The October calls could see modest gains from here on such a gain, as they’re already in-the-money and carry no time premium.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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