why is EXXI is down? here's one answer

[setliff]

Is Energy XXI finally turning around?
By David Russell (david.russell@optionmonster.com) | optionMONSTER – 4 hours ago

EXXI 24.14 +0.26

Oil drillers are waking up, and traders are betting that Energy XXI will reverse its long slide.

optionMONSTER's Heat Seeker monitoring program detected the purchase of more than 6,400 February 25 calls, most of which priced for $0.85 and $0.90. Volume was 23 times previous open interest at the strike, indicating that new positions were initiated.

Those investors now have the right to buy shares in the Bermuda-based company for $25 through expiration, no matter how high they might trade during that period. A rally of 20 percent in the stock would increase the value of the long calls by more than 300 percent. (See our Education section for more on the leveraging potential of options.)

EXXI rose 1.13 percent to $24.15 yesterday but is down 27 percent since Oct. 23. The company has been hurt by difficulties at its Strickler well in the Gulf of Mexico, and some traders racked up quick profits earlier this month with short-term downside bets.

Other energy names, especially shale-gas producers and wildcatters, were also active yesterday as investors look for an improving global economy to increase demand.

Overall option volume was 10 times greater than average in yesterday's session, with calls accounting for almost three-quarters of the total.

[dan_s]

EXXI's natural gas is high btu and contains a lot of ngls. At our Dallas luncheon I pointed out that ngl prices have risen sharply since the 3rd quarter. EXXI's natural gas sells at a premium to NYMEX.

[cviller]

Schiller has been a pretty deft hedger over the years. I bet he's hedging some gas about now.