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Bears targeting Newfield after rally

David Russell (david.russell@optionmonster.com)

Newfield Exploration has rallied hard, and one investor is bracing for a possible pullback.

optionMONSTER's Depth Charge monitoring program detected the purchase of 5,000 May 34 puts for $0.80 and the sale of an equal number of May 32 puts for $0.20. Volume was below open interest in the lower strike, which suggests that and existing position was closed and rolled higher.

Puts lock in the price where shares can be sold, so they go up when the stock goes down. Investors use them to hedge long positions or to speculate on a drop. (See our Education section)

Friday's transaction cot $0.60 and raised by $2 the level at which they'll sell. It also tripled their downside leverage.

NFX closed the session up 0.51 percent to $33.73 and has gained 36 percent since the beginning of February. The oil company has been riding a wave of bullish sentiment toward the energy sector and jolted higher on a strong earnings report last week.

Total option volume was more than quadruple Newfield's daily average, with puts outnumbering calls a bearish 15-to-1 ratio.

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