Options Trading News

June 13, 2013  Thu 9:49 AM CT

A large trade is betting that shares of Marathon Oil will see a sharp move up or down in the next four months.

optionMONSTER systems show that one block of 6,000 October 34 calls was sold for the bid price of $2.20. The volume was 6 times the strike's previous open interest, so this is a new position.

Just before that trade, 300,000 MRO shares changed hands for $34 even. The combination of stock and options creates a delta-neutral play that is looking for higher volatility in the shares rather than a specific direction. (See our Education section)

MRO is up 1.23 percent to $33.82. The energy company was at a high above $46 on May 20 but below $30 a month earlier.  The 20-day historical volatility for MRO is at 25 percent, in the middle of its recent range, while the average implied volatility is near 52-week highs at 32 percent.

More than 7,300 MRO options have traded so far today, twice its full-session average in the last month.
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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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