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Is Basic Energy due for further losses?

David Russell (david.russell@optionmonster.com)

The bears want to knock Basic Energy Services down a peg.

optionMONSTER's Depth Charge tracking program detected the purchase of 3,100 October 10 puts for $0.55. Volume was almost 4 times previous open interest at the strike.

Those contracts lock in the price where traders can sell shares, so essentially serve as insurance against a decline. They will generate significant leverage if the stock falls hard over the next 7-1/2 weeks. See our Education Section for more on how options can be used to profit from stocks dropping and rising.

BAS rose 0.52 percent to $11.61 in morning trading. It bounced from about $10 in late July and early August, but has been trapped at its 100-day moving average since then. That could make some chart watchers think it's run out of momentum, and is ready to fall once again.

The company, which provides oil-field services in the U.S., is still down by more than two-thirds from its peaks just 13 months ago.

Overall option volume in BAS is 9 times greater than average so far today, with puts outnumbering calls by more than 700 to 1.

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