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November 4, 2011  Fri 11:55 AM CT

PBR: SEE CHART GET CHAIN FIND STRATEGIES
Petrobras is seeing unusual option activity in the second session this week, this time entirely in put selling.

Topping the action are the January 24 puts, which have traded more than 12,500 times against open interest of 5,149 contracts. All of the big institutional trades went for the bid price of $1.05, including blocks of 6,000, 3,000, 2,000, and 1,000.

This put selling is looking for PBR to stay above the $24 strike price through expiration. On Wednesday optionMONSTER's systems detected straddle selling in the Brazilian oil and natural-gas company. (See our Education section)

PBR trades at $27.18, down fractionally on the day. Shares have been trending up for the last month from a 52-week low of $20.76, but the gains have not made up the losses from August and September. The stock was above $35 in late July.
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Market Level Making You Nervous, Huh? Part 3

In last week's article, we discussed how important the extra cash you save by using the Stock Replacement Strategy over buying the actual stock is! That extra cash in our account instead of being unnecessarily tied up in a stock position allows us to buy the puts we would need to protect our downside in the case of a major sell-off.

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