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Bearish trading hits Marathon Oil

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Traders are positioning for a potential pullback in Marathon Oil with shares near all-time highs.

More than 17,000 July 39 puts were purchased for $0.41 to $0.54 in volume far above the strike's previous open interest of 1,892 yesterday, according to optionMONSTER's Depth Charge tracking system. Around the same time, traders also bought about 3,500 July 40 puts for $0.83 to $0.98 against open interest of 1,326 contracts.

Long puts lock in the price where a stock can be sold no matter how far it might fall. They can be used to make outright bearish bets or to hedge long positions , but either way they will lose value if shares rise. (See our Education section)

MRO slipped 0.2 percent yesterday to close at $39.63. The energy company climbed to $40.22 on Monday, just off its all-time high of $40.70 from June 2007.

Total option volume in the name topped 26,000 contracts yesterday, quadruple its daily average for the last month. Overall puts outnumbered calls by a bearish 10-to-1 ratio.

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