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DCP Midstream draws puts at highs

Mike Yamamoto (mike.yamamoto@optionmonster.com)

DCP Midstream hit an all-time high on Friday, but one trader is positioning for a possible drop in the next five weeks.

optionMONSTER's Depth Charge system detected the purchase of 1,500 July 50 puts in the last hour of the session, most of them going for $0.85 in one large block. The volume was well above the strike's open interest of just 317 contracts before the trade appeared, showing that this is a new position.

The puts, which lock in the price where the shares can be sold, were not tied to any stock trading identified by our scanners on Friday. The trader could be hedging an existing long position or making an outright bearish bet that shares will fall below $49.15 by expiration in mid-July. (See our Education section)

DPM rose 1.65 percent on Friday to close at $51.08 after reaching a lifetime high of $51.96 earlier in the session. The natural-gas company dipped below its 50-day moving average early this month but bounced off recent support around $47. Shares have encountered resistance at the $51 twice before, in early 2012 and mid-2007.

Total option volume in the name on Friday was 17 times its daily average for the last month. Puts outnumbered calls by more than 2 to 1.