Unusual Options Activity: Petroleo Brasiliero (PBR)

Brazilian-based oil giant Petroleo Brasiliero (PBR) is having a strong year, with shares up 46%. One trader sees shares pulling back in the second half of the year.

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  • That’s based on the January 2025 $15 puts. With 247 days until expiration, 15,005 contracts traded compared to a prior open interest of 197, for a 76-fold rise in volume on the trade. The buyer of the puts paid $1.21 to make the bullish bet.

    PBR shares recently traded just over $17, so the stock would need to fall just over $2, or just over 12%, for the options to move in-the-money. PBR has been trending back to its 52-week high of $17.91, set back in February.

    The oil giant has seen revenues and earnings drop 15% and 30% respectively in the past year compared to the year before. That’s in line with the slowdown in energy prices, which have now been flatlining.

    Plus, as the Brazilian government has an ownership stake in the company, PBR can be susceptible to wide swings in prices.

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  • Action to take: In the short-term, if shares don’t break higher, they’ll likely pull back and take a breather. Investors interested in shares can likely get them closer to $15 in the coming months, given how the stock periodically gets slammed lower.

    PBR pays a dividend, but that payout fluctuates over time. Right now, it’s a hefty 12.4%.

    For traders, the January $15 puts could see some double-digit returns, particularly on any brutal one-day drop for shares in the months ahead. That makes them a reasonable speculation now.

     

    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 company mentioned in this article.

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