KMI is back into an incredibly tight range.
If anyone recalls, the stock was headed to zero because it’s debt situation… sucked.
It didn’t help that Oil was sub 30/bbl.
Now with oil having it’s strongest month in a long time (overbought), now may be a good time to gamble on vol expanding.
I’d normally say just buy straddles but to be honest the risk here is to the downside, not upside.
If you bought a straddle and the stock rallied, it will be a tougher trade to profit from due to continued drops in implied volatility and realized.
No, it’s better to just take a gamble that it’ll head back to 15 soon.
A good long vol/long gamma bet:
Buy to Open KMI May 16 Puts @0.47
Sell half on double.
Full Risk
I’d go so far as to call these options “cheap.”
Now if oil continues to rip higher, the debt situation will improve in KMI and you could see a continued short squeeze. That’s why you want to look at buying some OTM “cheap” puts.
