Bullish Anadarko options bets soar on settlement news

Reuters

Bullish options bets placed in Anadarko Petroleum this week made significant profits on Thursday when the company announced it had reached a settlement to resolve pollution clean-up claims, sending shares more than 15 percent higher.

Anadarko Petroleum shares hit a new record high of $99.53 on Thursday after the company said it would pay $5.15 billion to end years of litigation over claims stemming from the 2009 bankruptcy of paint materials maker Tronox, the biggest environmental bankruptcy settlement on record.

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Options volume in the stock was 10 times the recent daily average with 137,000 calls and 12,000 puts traded by late afternoon on Thursday, according to options analytics firm, TradeAlert.

Among the most active contracts were $105 and $115 calls that expire on May 14. Since call options are generally viewed as bullish, the contracts were mostly based on expectations the stock would rise to those levels by mid-May.

Options volume in the stock had been high this week but among the most notable trades were in the $90 calls that expire later this month.

On Tuesday, 15,600 contracts of April $90 calls were traded at between 48 to 80 cents, far above the strike's previous open interest of 4,491 contracts, according to optionMonster.com.

"Since the options on Anadarko were not expensive in pure dollar value, for people who have been following the stock and expected some sort of a settlement, the potential reward was worth the potential risk they were putting in," said JJ Kinahan, chief strategist with TD Ameritrade in Chicago.

(Reporting by Angela Moon; editing by Andrew Hay)