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May 16, 2013  Thu 3:47 AM CT

PXP: SEE CHART GET CHAIN FIND STRATEGIES
A bearish trade is targeting Plains Exploration as shares try to hold above a key support level.

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.
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Options Academy: Ron's Risk Calculation--A Real Life Example

It is rare that I get a chance to give a real-life, real-time example in my articles that the readers were not only following but were actually involved in at the time the event is happening. Well, that is where we are right now in our QQQ trade from last week. Let's recap the trade itself.

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