What's behind put strategy in the XOP

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A huge put trade topped yesterday's option action in the SPDR Oil & Gas Exploration and Production Fund.

A trader sold 40,625 December 50 puts for $1.35 against open interest of more than 71,000 contracts, according to optionMONSTER's systems. He or she also bought 60,888 December 45 puts for the ask price of $0.51 against open interest of just 1,065, indication a new position at this strike.
 
This could be a roll, with the trader selling the higher-strike puts to close that position and buying more at the lower strike. It could also be a new ratio spread that is looking for the XOP to be above $50 or well below $45.

The XOP finished the day at $53.77, down fractionally on the day. The exchange-traded fund was above $57 two weeks ago and near $60 in mid-September, trending higher from support at $45 in the last four months.

More than 121,000 XOP options traded in all, 10 times the daily average over the last month.

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