Bear drills into McMoRan Exploration

Chris McKhann (chris.mckhann@optionmonster.com)

McMoRan Exploration is down today even as the broader market rallies, and one trader is looking for shares to fall further.

The oil and natural-gas company is down 4.28 percent to trade at $12.80. MMR has fallen from above $16 at the beginning of December but is well above the 52-week low of $8.25 set in early October.

Today's option volume tops 28,000 contracts, compared to a daily average of 5,000. optionMONSTER's systems show that most of the activity is in one put spread.

A trader sold 10,000 February 12 puts for $0.70 against open interest of 20,509. Seconds later he or she bought 10,000 March 12 puts for $1.34 with no previous open interest at that strike.

This could be a calendar spread designed to profit if shares are around $12 at expiration. It is also possible that the trader is rolling a put position out to March as the February expiration cycle enters the last four weeks, with time decay increasing exponentially. (See our Education section)

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