Market News

December 13, 2016  Tue 8:14 AM CT

A large trade is positioning for a possible pullback in Exxon Mobil.

The energy giant has lagged smaller oil producers, which have spiked higher since OPEC agreed to cut crude production. Exxon did gap higher yesterday after news reports that CEO Rex Tillerson is the leading candidate for secretary of state in the Trump administration, but option activity showed caution on the stock.

Our tracking systems detected the purchase of 10,000 April 90 puts in one print for $3.45 yesterday. This is clearly a new position, as open interest in the strike was only 469 contracts before the trade appeared.

Long puts lock in the price where a stock can be sold, so they make money if shares decline. Investors use them to hedge long positions or to speculate on a drop. (See our Education section)

XOM rose 2.22 percent to $90.98 yesterday and is up 3 percent in the last month. The energy giant's last quarterly report on Oct. 28 was bearish, and its next earnings results are scheduled for pre-market hours on Jan. 31.

Overall option volume in the name was twice its daily average yesterday.

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