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September 22, 2016  Thu 5:47 AM CT

XOP: SEE CHART GET CHAIN FIND STRATEGIES

A large trade is betting that the SPDR S&P Oil & Gas Exploration & Production Fund will rally in the next two weeks.

optionMONSTER's monitoring system shows that 10,000 Weekly 39 calls expiring on Oct. 7 were bought for $0.21 while 10,000 Weekly 42 calls in the same expiration were sold for $0.01 yesterday. These are clearly new positions, as volume dwarfed open interest in both strikes.

This vertical spread is looking for XOP to rally above $39 by expiration. The sale of the higher-strike contracts reduces the cost of the long calls but limits potential gains, as the trader will be obligated to sell shares if they rise above $42. (See our Education section)

XOP rose 3.59 percent to $36.81 yesterday but is down 6 percent in the last month. Overall option volume was twice the fund's daily average.

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