Plains Exploration faces bearish play
Chris McKhann | [email protected]
optionMONSTER's Depth Charge system detected the purchase of 5,000 June 55 puts for $1.83 and the sale of 5,000 June 40 puts for $0.55. The volume was multiples of the previous open interest at each strike, clearly showing that this is new positioning.
The trade cost $1.28 to open, which is the maximum amount at risk in this vertical spread. The maximum gain of $2.72 would be realized if the position is held until expiration and PXP is below $40. (See our Education section)
PXP rose 1.01 percent to $44.79 yesterday. The oil and natural-gas company has bounced off support at $44, a level tested only once since December, when it gapped up from $36. Shares were trading above $48 a month ago.
Total option volume in PXP exceeded 22,000 contracts yesterday, more than 5 times its daily average for the last month. Puts outnumbered calls by more than 3 to 1.