McDermott draws downside position

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Shares of McDermott International went on a roller-coaster ride last month, and traders are positioning for the next turn to be lower.

More than 6,700 October 12 puts were bought yesterday, including two prints of 3,000 each that went for $0.35 and $0.40, according to optionMONSTER's Depth Charge tracking system. The volume was more than 11 times the open interest in the strike at the beginning of the day, indicating that these are new positions.

Our systems did not detect an stock trades that were directly related to this option activity, though the puts could have been purchased to hedge a long position that had been established earlier. Otherwise, it could be a straightforward bearish bet that shares will drop more than 4 percent by expiration in less than three weeks. (See our Education section)

MDR closed yesterday off 0.49 percent at $12.16. Shares of the energy-service construction company rose sharply from below $11 to above $13.56 in the first half of September but have given up about half of those gains since then. The stock is now back to the top of a range that began in late June, and yesterday's put buying is looking for shares to return to the low end of that channel.

Overall option volume in the name was 5 times its daily average. Puts outpaced calls by 8 to 1, a reflection of the session's bearish sentiment.

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