Readers have been asking for short interest data on BP and here, via Data Explorers, it is:
As you can see from the graph, stripping out the spike related to the last (?) dividend payment, the underlying level of stock outstanding on loan (SOOL) has barely budged since the spill
So, short sellers can’t be blamed for the plunge; the selling must be coming from somewhere else, such as long-only funds. To wit we note Thursday’s rumour that Norges Bank is looking to offload 330m shares.
And the following . . .
Brokers say the total Transatlantic volume of stock traded in BP yesterday had a value of $8bn. To put that figure into some perspective, the total volume traded on the entire EuroStoxx index yesterday amounted to $15bn.
Moreover, since the Deepwater Horizon rig exploded on April 21st, 70 per cent of BP’s market cap has turned over, most of it in the US. Trading volumes in BP ADRs are usually 10 per cent lower than the ordinary shares in London. Since the spill that position has been reversed and the ADRs have traded 3.5 times the ordinaries. All of which suggests BP’s largest US investor base have been dumping stock.
Excluding Thursday’s fall, the breathtaking decline in BP shares since the disaster has knocked 232.23 points off the FTSE 100, according to the Daily Telegraph. That’s around a third of the 12 per cent fall in the FTSE 100 over the same period.
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And in other BP news, Spike Lee apparently wants the US soccer team to wear “BP Sucks” shirts in their World Cup match against England on Saturday, while Matt Simmons, of Simmons & Co fame, reckons BP has got about a month before it files for Chapter 11 bankruptcy protection.
Via Fortune:
They have about a month before they declare Chapter 11. They’re going to run out of cash from lawsuits, cleanup and other expenses. One really smart thing that Obama did was about three weeks ago he forced BP CEO Tony Hayward to put in writing that BP would pay for every dollar of the cleanup. But there isn’t enough money in the world to clean up the Gulf of Mexico. Once BP realizes the extent of this my guess is that they’ll panic and go into Chapter 11.
Note though that Simmons also thinks the only way to stop oil leaking from the Macondo well is by nuking it:
Simmons also thinks that perhaps the only way to seal the gush of oil is by doing what the Soviet Union did decades ago — setting off a bomb deep underground so that the fiery blast will melt the surrounding rock and shut off the spill.
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Update: 12.25pm (BST). It was remiss of us to neglect the options market (something we do all too often) and the frenzied trading in BP put and calls.
So here’s something from Wall Street Pit that should put that right.
Options volume on beleaguered oil company, BP PLC, is fast approaching 750,000 contracts, fueling a more than 79.7% upward shift in the stock’s overall reading of options implied volatility to a 5-year high of 120.96%. Utter pandemonium erupted in BP options after the firm’s shares plunged 16.00%, crashing straight through the now defunct 52-week low of $34.15, to touch an intraday and new 5-year low of $29.13.
Catalysts for the squall are not difficult to come by with analysts suggesting an increased probability BP will cut dividends to help pay for the disaster in the Gulf of Mexico. The first half of the trading day was relatively calm with shares increasing 1.62% over the opening price of $33.90 to an intraday high of $34.45. But, by noon time on the east coast, BP’s shares had already begun their descent.
Options activity on the stock can easily be described as frenzied as volume continues to grow in both call and put options across multiple expiries. Investors are displaying a slight preference for put options, with roughly 1.35 put contracts exchanged to each single call option in play thus far in the trading day. Put buyers are out in full force, scooping up at least 1,600 of the bearish contracts at the June $17.5 strike for an average premium of $0.25 apiece. Buying interest in the front month is heaviest in now in-the-money puts at the June $30 strike where more than 43,000 contracts changed hands by 3:05 pm (ET). Investors buying these contracts now face an asking price of $2.85 apiece. Other pessimistic players cast doubts for a near-term recovery by selling call options. Less than 60 minutes remain in the current trading session. Option volume on BP has surpassed 710,000 contracts and continues to steadily rise.
H/T Matty Dolittle Touch.
Related links:
Spotted at Glyndebourne – Times City Diary
The ‘Sinofication of BP’: thinking the unthinkable – FT Alphaville
A further indignity for BP? – FT Alphaville
Danger! Knife falls even further – FT Alphaville
Danger! Falling knife – FT Alphaville