The Market Vectors Oil Services Fund is at an all-time low, and one trader is positioning for further declines.
The OIH is down fractionally on the day at $34.22 after posting a closing low yesterday. Shares have trended steadily lower from a high above $45 in February.
The option volume isn't huge, but it is dominated by a bearish play. A trader bought 1,000 January 25 puts for $4.25 and sold 2,000 January 31 puts for $2.25, according to optionMONSTER's Depth Charge system. The volume at both strikes was more than open interest, so this was a new ratio spread.
This put spread takes a maximum profit if the OIH falls to the $31 level by expiration, where the short puts expire worthless and the position is worth its maximum. If the OIH is above $35, the trader actual profits by $0.25; if it is below $31, he or she is essentially long shares. (See our Education section)
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