Market News

November 25, 2016  Fri 6:14 AM CT

A large trader apparently believes that downside potential is limited in WPX Energy.

OptionMonster's market scanners show that 4,000 December 11 puts were sold for $0.20 and $0.25 at the same time on Wednesday. This is clearly new positioning, as open interest in the strike was only 1,221 contracts before the trade appeared.

Short puts lock in a price where investors must buy a stock, while letting them collect premium. Traders use the technique when they like a stock and think that the risk of a big drop is limited. (See our Education section)

WPX rose 1.74 percent to $13.43 on Wednesday and is up 15 percent in the last three months. The oil and gas company is expected to release quarterly results after the close on Feb. 22.

Overall option volume in WPX was 3 times greater than average on Wednesday.

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