Options Trading News

November 13, 2013  Wed 10:23 AM CT

A trader is positioning for further declines in BHP Billiton 

optionMONSTER's Depth Charge tracking system shows that 4,485 December 67.50 puts were bought in one print for $1.17 this morning. This is clearly a new position, as open interest in the name was just 138 contracts before the trade appeared.

These puts could have been purchased as a hedge on a long position or as an outright bearish play. Either way, they will expire worthless if the stock stays above $67.50 through mid-December. (See our Education section)

BHP is down 0.92 percent to $69.62 near midday trading. The Australian mining company gapped above $72 after releasing quarterly numbers last month but has since given up those gains.

Total option volume in the name exceeds 9,100 contracts so far today, already more than triple its daily average for the last month. Overall puts outnumber calls by 6.5 to 1.
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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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