Plains Exporation draws downside bet

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Plains Exploration & Production is near 2012 highs after its recent takeover news, but option traders apparently believe that the stock's run may be premature.

More than 2,200 May 47 puts traded in a strong buying pattern Friday afternoon, mostly going for $3.25, according to optionMONSTER's Depth Charge system. Open interest in the strike was just 10 contracts at the beginning of the day, so these are clearly new positions.

PXP rose 2.04 percent on Friday to end the week at $46.08. Shares gapped 25 percent higher from about $36 to $45 on Dec. 5 after Freeport-McMoRan Copper & Gold announced plans to buy the energy company along with McMoRan Exploration for $9 billion . PXP has been climbing since then and is now is about $1 away from its 52-week high, but some analysts have questioned whether Plains shareholders will oppose the deal on grounds that it undervalues the company.

Friday's options will track declines in the stock price more closely because they are in-the-money puts. This suggests that the trade is more likely a speculative bearish bet that PXP will drop roughly 5 percent by expiration in mid-May, rather than a hedge on a long position . (See our Education section)

The May 47 puts made up more than half the total option volume in PXP on Friday. Overall puts at all strikes outpaced calls by about 3 to 2.

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