Options Trading News

January 31, 2014  Fri 4:14 AM CT

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.
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