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More downside seen for Con Edison

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Consolidated Edison plunged last month in the aftermath of Hurricane Sandy, and some traders are positioning for further downside.

optionMONSTER's Depth Charge system shows that 1,348 February 52.50 puts were purchased yesterday for $0.25. The volume was well above the strike's open interest of 829 contracts at the beginning of the day, indicating fresh buying.

ED gained 1.53 percent yesterday to finish at $56.98. Shares of the power company, which provides utility services to New York and New Jersey, fell sharply in early November after assessing the magnitude of damage from the massive storm in late October. The stock has been climbing since hitting a 52-week low of $53.63 on the day after Thanksgiving.

Yesterday's puts were not tied to any stock activity identified by our systems during the session, though they could have been bought to hedge a long position established earlier. The trades could also be making a straight bearish bet that ED will fall more than 8.3 percent by expiration in mid-February. (See our Education section)

Total option volume in the name was triple its daily average in the last month. Puts outnumbered calls by more than 45 percent.

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