A huge three-way spread dominates today's option activity in Newfield Exploration.
NFX is down 1.3 percent to $31.69. The oil and natural-gas company has again retreated from resistance at $32 that has been in place since mid-May. Shares hit a 52-week low of $25.01 near the end of June.
optionMONSTER's systems show that a trader bought two block of 5,000 December 35 calls for $1.71 and $1.72 while selling 20,000 December 40 calls for $0.50 and 10,000 December 22.50 puts for $0.40. The volume at each strike was more than 10 times the previous open interest, so this is a new combination play.
The trader is selling the puts to help offset the purchase of the call ratio spread . In total he or she ends up spending $0.315 for the bullish combination trade.
The strategy would take a maximum profit with NFX right around $40 at expiration. The trader is effectively short shares above that level and effective long shares below $22.50.
More than 40,000 NFX options have traded at all strikes today, which compares to a total open interest of 77,000 and a daily average of 1,400.
More From optionMONSTER
As traders wait on the Federal Reserve, putting off any major decisions until they hear the latest word in FOMC …