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January 30, 2013  Wed 12:22 PM CT

A huge put spread dominates the option volume in ConocoPhillips today.

optionMONSTER's Depth Charge system shows that a trader bought 48,700 August 57.50 puts for the ask price of $2.27 and sold the same number of August 47.50 puts for the bid price of $0.47. The volume dwarfed the previous open interest at those two strikes, which was 1,138 and 194 respectively, clearly showing that these are new positions.

This vertical spread cost the trader $1.80, which is the amount at risk if COP remains above $57.50 through expiration in mid-August. The potential gain of $8.20 would be realized if shares are under the lower strike price of $47.50 at that time. (See our Education section)

COP hasn't been below $47.50 since October 2011. The oil and natural-gas company is down 0.48 percent to $61.37 this afternoon after hitting a session high of $62.05. Shares have been running higher since bouncing at the $58 level earlier in the month.

Today's put spread makes up the bulk of COP's total option volume of more than 135,000 contracts so far today, compared to a daily average of 9,615 in the last month. Puts outnumber calls by nearly 4 to 1.
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