Huge bearish spread in Exxon Mobil

optionMONSTER

A large bearish trade topped yesterday's option activity in Exxon Mobil as shares pushed higher.

optionMONSTER's Depth Charge system shows that a trader bought 20,000 October 85 puts for $1.91 and sold the same number of the October 75 puts for their bid price of $0.56. This is clearly new activity, as the previous open interest at each strike was below 3,000 contracts.

The resulting vertical spread cost the trader $1.35, which is the maximum risk if XOM remains above $85 though expiration in mid-October. The maximum gain would be $8.65 if shares are below $75. (See our Education section)

XOM rose 0.62 percent to $90.58 yesterday, the highest close in a month, taking it back near long-term resistance at $91. The energy giant traded at a 2013 low under $86 three weeks ago.

More than 107,000 XOM options changed hands in total yesterday, with puts outpacing calls by 2 to 1. That volume compares to a daily average of 40,000 in the last month.


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