From Schaeffer's Investment Research:
BP plc (BP) has once again dominated headlines today, amid reports that the beleaguered oil concern is negotiating the departure of Chief Executive Tony Hayward. More specifically, Sky News reported that Hayward will be nominated for a board position at BP's Russian venture TNK-BP, with American executive Bob Dudley expected to take the reins as CEO.
Investors seem to be embracing the potential management shake-up, with the shares of BP up nearly 5% at last check. However, not everyone is betting on upward momentum for the stock in the near term, as it appears one options speculator is rolling the dice on a short-term pullback for the stock.
Earlier today, the investor sold several hundred August 35 calls for the bid price of $4.25 each. Then, to hedge his bets against unfavorable price action, the trader simultaneously bought an equal amount of August 36 calls for the ask price of $3.55 per contract. In other words, it appears the strategist constructed a bear call spread on BP for a net credit of $0.70 per pair of calls.
By employing this strategy, the investor is hoping the shares of BP retreat south of the $35 level by August options expiration, in which case all of the calls will expire worthless, allowing the trader to pocket the $0.70 received at initiation. However, since the trader hedged his bearish bets by buying August 36 calls, his maximum risk is limited to $0.30 (difference between strikes minus net credit) per pair of calls, should BP remain atop the $36 level through front-month expiration....Schaeffer's BP CHARTS