OptionsHouse

Options Trading News

January 31, 2014  Fri 4:14 AM CT

PSX: SEE CHART GET CHAIN FIND STRATEGIES
A large trader is looking for Phillips 66 to hold its ground.

optionMONSTER's tracking programs detected unusual put selling the oil refiner yesterday just 10 minutes after a similar trade in Marathon Petroleum, suggesting that both transactions were the work of a single large player.

More than 5,500 PSX March 67.50 puts were sold for $0.70 and $0.65. Volume was more than 10 times the previous open interest in the strike, indicating that new positions were initiated.

Put selling generates income but creates an obligation to buy shares if a stock falls to a certain level. Investors use the strategy when the like companies but don't want to shell out cash to get long right away. (See our Education section)

PSX fell 0.84 percent to $73.56. The stock has appreciated 24 percent since the refinery sector was recommended on our proprietary Market Action webinar in early October. That's more than triple the gain of the S&P 500 in the same period.

Despite the big run, shares have drifted lower since the year began. That could make some chart watchers think that they'll drift in a range and help explain the put selling.

Total option volume was more than twice the daily average in PSX.
Share this article with your friends


Related Stories

PSX

What's behind put spike in Phillips 66

February 9, 2016

The oil-refining company is down 19 percent in the last three months, and one big put buyer is positioning for more downside potential.

OptionsHouse

Premium Services

Upcoming Webinar:

Using Options For Income

http://bit.ly/1nY1OKA

Jon Najarian and Adam Mesh of Options Wealth Machine discuss a detailed strategy utilizing credit spreads to generate income, and how any level of trader can use this simple trading technique.

Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

View more education articles »