Options Trading News

December 7, 2012  Fri 3:47 AM CT

Anadarko Petroleum is at a potential resistance level, and one investor apparently thinks that it might head lower.

optionMONSTER's Depth Charge tracking program detected the purchase of almost 11,000 January 70 puts for $1.44 and the sale of an equal number of January 65 puts for $0.48. Volume exceeded the open interest at each strike, so this is a new put spread.

The trade cost $0.96 and will earn a maximum profit of 421 percent if the energy stock falls to $65 or lower on expiration. (See our Education section for more on the strategy, which is known as a vertical spread because it leverages a move between two price points.)

APC fell 0.52 percent to $74.35 yesterday and is up more than 10 percent since late October. The shares are now back to roughly the same level where they peaked in May and September, which could be leading some chart watchers to believe that they're now at risk of getting sold.

Total option volume was triple the daily average, according to the Depth Charge. Puts accounted for two-thirds of the total.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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