Options Trading News

October 5, 2012  Fri 9:56 AM CT

The SPDR Oil & Gas Exploration & Production Fund has been range-bound, and an unusual put trade appears to be looking for that trend to continue.

The XOP trades at $56.21, up 0.77 percent this morning. The exchange-traded fund was down at $52 a month ago, then climbed to just shy of $60, its highest level since March. Shares have been trending higher for the last three months from support around $45.

Two big option trades top the tape today. The first involved 10,154 December 50 puts that appear to have been sold for $1.16, it could have been a closing trade because it was well below the strike's open interest of more than 74,000. About 50 minutes later a block of 7,500 October 53 puts was sold for $0.26 at more than open interest at that strike, so it was a new position.

The put selling is a bet that XOP won't see much in the way of downside in the coming weeks. The trader is also showing the willingness to buy shares if they are below $53 in the short term. (See our Education section)
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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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