PG&E options traders bet stock not out of the woods yet

NEW YORK, Nov 16 (Reuters) - The wild swings in the shares of PG&E Corp over the past week have drawn a rush of trading in the electricity provider's options contracts and traders are betting the stock is going to remain prone to wild gyrations in the near term.

Shares of the electricity provider in the northern California region ravaged by a deadly wildfire jumped 36 percent on Friday. Fears of bankruptcy, stemming from the utility's potential liability from the fire, eased amid signs of support from one regulator for the company.

The stock has shed about half its value over the last week and its bonds came under intense pressure.

In the options market, trading volume jumped to a record high this week with more than 50,000 contracts changing hands on average daily, data from New York-based options analytics firm Trade Alert showed.

While the majority of the trading over the last few days was due to investors rushing to load up on protection as the shares plunged, trading sentiment on Friday was more mixed with some traders betting on a rebound in the shares.

Investors' expectation for volatility, however, remained elevated.

"Some of the concerns have eased, but options traders expect the volatility to continue in the short term," said Fred Ruffy, options analyst at Trade Alert. "The stock is certainly not out of the woods yet."

Investors are watching for clues about whether California state officials will intervene should PG&E be found responsible for the Camp Fire.

The California Public Utilities Commission issued a statement on Thursday saying that state law requires it to consider a utility's financial health when weighing a request to cover costs associated with wildfires.

Still, even if PG&E dodges bankruptcy, it was not immediately clear that PG&E shareholders would not take a hit. The regulator also said it would be examining PG&E's corporate governance, structure and operations as part of an existing investigation of the company's safety culture.

On Friday, options trading volume was active with about 40,000 contracts traded by 11:30 a.m. (1630 GMT).

(Reporting by Saqib Iqbal Ahmed Editing by Nick Zieminski)