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August 20, 2012  Mon 10:03 AM CT

XOP: SEE CHART GET CHAIN FIND STRATEGIES

A huge put trade in the SPDR Oil & Gas Exploration & Production fund is the biggest transaction on our monitors so far today.

Our Depth Charge monitoring system detected the purchase of 62,136 of the October 48 puts for $1.05. A block of 82,833 of the September  49 puts traded around the same time at the $0.56 bid price, indicating they were sold. Volume was below open interest in the September puts but not October.

The sale in September could be to open or to close. If it is to open, the trade was an odd ratio diagonal spread looking for XOP to be around $49 at that first expiration. The more likely explanation is that the September contracts were sold and the trader rolled the position down and out while reducing its size.

XOP fell 0.81 percent to $53.65 in morning trading. The fund has been outperforming the broader market in the last two months as investors flocked to energy stocks, but it's still well below its 52-week high of $61.82 in mid-March.

More than 146,000 XOP options trade this morning, more than 9 times the daily average. Calls accounted for less than 600 of that volume, according to Depth Charge.

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