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Encana attracts vote of confidence

Mike Yamamoto (mike.yamamoto@optionmonster.com)

A trader is betting against any steep losses in Encana through mid-2014.

optionMONSTER's tracking systems detected the sale of 3,500 July 16 puts for $0.45. This is clearly a new position, as open interest in the strike was a mere 6 contracts before the trade appeared.

This put seller is will keep the $0.45 credit as profit if ECA remains above $16 through expiration in mid-July next year. But the trader will be on the hook to buy shares if they fall below that level. (See our Education section)

ECA fell 0.31 percent yesterday to close at $19.03. The Canadian natural-gas and oil company bounced sharply off its 50-day moving average in mid-November and peaked near $20 a week later, but it has been drifting back lower since. The stock has not been below $16 since February 2005.

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