As the price of crude drops, the number of wells that are "commercially viable" also drops.
Even more distressing is the lack of implied volatility in SD. At the close yesterday March 2015 calls and puts at $5 were asking 60¢ and 68¢ respectively. A year ago, that kind of premium was available just a couple months out. Also the 8¢ difference between them is only a penny away from the difference between the strike and the closing price of the shares. The options market shows no bias either up or down.
That's the problem with a $5 stock. If it stays down there, institutionals will begin to dump it and that puts even more downward pressure on it. And it's the institutional holders who bring liquidity to the options.
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