BP 5Y CDS at 380 on Bankruptcy Rumor, Puts Active Down to $7.50, Bond Yields 7.89%, Stock Hits $29 and Value Investor Tilson Buys More [Charts]

This BP action reminds me of my first blog posts back in mid 2008 when large caps were trading at multi-decade lows.  Look at the similarities between BP today and the action in Bear Stearns, GM, Freddie, Fannie and Lehman Brothers 2 years ago.  This is a cash rich big oil co. though, but a fierce battle with the other side of the balance sheet (liabilities) is coming.  By the way, what ever happened with the GM exchange traded notes (retail bonds)?

BP bankruptcy rumors and chatter hit the mediasphere today.  Some value investors see opportunities.  If you want to see live BP video of the oil leak go here.
"They have about a month before they declare Chapter 11. They're going to run out of cash from lawsuits, cleanup and other expenses." - Matt Simmons  Simmons & Co. (CNN Money)

BP ADRs Plunging As Two Rumors Of Imminent Bankruptcy Hit Market - (Zero Hedge)

Has BP Sprung A Counterparty Risk Leak? - (Zero Hedge)

US Lawmakers sent a letter to BP: "We urge you to halt your planned dividend... until you have done the hard work of capping the well, cleaning up the Gulf Coast and making whole those whose livelihoods are threatened" (BBC)

BP Bonds Trade as Junk, Credit-Default Swaps Soar - (Bloomberg)

*Value Manager Whitney Tilson is buying more BP stock.  He increased his position to 5% today and called bankruptcy silliness - CNBC June 8, June 9

Check out the price action in BP PLC securities and derivatives.  BP's 5-Year credit default swap spiked 45% to 382bps today (credit insurance priced in basis points from CMA Datavision).  BP CDS is up 128% from June 1.  Remember 424,000 options traded that day on 7.15x average volume (59,300)?  There was no doubt volatility would continue.

Today saw heavy put volume in June and July, way above open interest and all the way down to the $7.50 strike.  BP stock closed at $29.20 down 15.8%, options traded 9x average volume (829,970) and ISE Implied Volatility hit a new high of 117.  Also check out BP bonds (BP.JE) due in 2013.  6,000,000 in par value blew out in three blocks at 91.50, yielding 8.16% (look at the table).  A million traded at the end of the day at 92.25.  WOW, value players placing bets???  Look at chart snapshots of BP's option chains, stock, CDS and bonds.  This was a crazy black swan event.

BP June 2010 Put Options

BP July 2010 Put Options

BP PLC Breaks $30, -15.8% again, RSI at 19 - Courtesy of StockCharts.com

BP 5-yr CDS chart - Courtesy of CMA Datavision

*I was just alerted to a chart of the inverted BP CDS Curve
1-Yr BP CDS is north of 500bps

BP.JE, 92.25 yielding 7.89% (finra.org)

Transaction snapshot (finra.org)