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Hess facing large downside position

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Hess has managed to cut some of its steep losses from earlier this year, but a large trade is positioning for another potential drop.

optionMONSTER's Depth Charge system shows that 15,000 January 52.50 puts traded in a strong buying pattern, led by two prints of 7,239 each that went for $3.05 and $3. Open interest in the strike was just 906 contracts at the start of the day, so these were clearly new purchases.

HES fell 0.78 percent to close at $53.56 on Friday, continuing to trade in its recent range of about $52 to $54 in recent days. The integrated energy company has been on a wild ride this year, going from about $67 to $40 from late February to late June and then rebounding to $56 last month with some bullish option activity along the way.

Friday's put buying, however, is preparing for another leg lower. Whether they were purchased as a straight bearish bet or a hedge on a long position , the puts are looking for the stock to fall roughly 8 percent by early next year. (See our Education section)

Overall option volume in the name was nearly triple its daily average. Puts outnumbered calls by more than 14 to 1.

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