PetroBras to Rally?

Petroleo Brasileiro (NYSE: PBR) is receiving a neutral to bullish trade this morning out in the Leap options. The Jan 2011 $40/30 put spread was sold for $4.37 just moments ago. The volume on this spread is below open interest, so this indicates that the trader is closing the long put spread position. This means that they think the majority of the money has been made on the downside and that the stock, and perhaps oil futures, will rally or, at least, not fall any further.

I am also seeing mild puts selling (position closing) in the some of the near term months, which would support the thesis that the stock is bottomed out. I would look to sell the March $35 put for $0.71 and use that credit to buy the $40/41 call spread for $0.45; net credit on the transaction would be $0.26 and the stock would only have to rise to $41 for you to make a nearly 485% gain.