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Trade sees floor in Magnum Hunter

Chris McKhann (chris.mckhann@optionmonster.com)

Magnum Hunter Resources is near 52-week highs, and one trader apparently believes that any downside will be limited in the long term for the oil and gas company.

optionMONSTER's tracking systems detected the sale of 3,000 January 2015 4.50 puts today for the bid price of $0.90 on a relatively wide bid/ask spread. The volume was about twice the previous open interest, so this is a new position.

The put seller is betting that MHR will remain above $4.50 through early 2015. The trader is also taking on the risk of having to buy shares if they are below that level at expiration. (See our Education section)

MHR is up 2.36 percent to $5.65 on the day. The stock jumped up through $4.50 near the end of August, which resistance before that, and the trader is hoping that it will be support going forward. 

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