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What's behind puts in energy ETF

Chris McKhann (chris.mckhann@optionmonster.com)

Big put trades dominate today's option volume in the SPDR Oil & Gas Exploration & Production Fund.

A trader bought 9,900 April 55 puts for the ask price of $1.12 in volume well above the strike's previous open interest of 3,928, so it is a new position. Seconds later, a block of 15,500 March 55 puts was sold for $0.30 against open interest of more than 54,000, according to optionMONSTER systems.

This appears to be a trader rolling a long-put position forward, closing the March contracts as expiration approaches at the end of next week. He or she is opening a smaller position in April but with a higher delta , indicating that leverage will be greater if the stock moves lower. (See our Education section)

The XOP is down fractionally on the day, trading at $57.83. That is the middle of its recent range, as the exchange-traded fund was near resistance at $60 a month ago and below $56 last week.

More than 26,000 XOP options have changed hands so far, already twice its daily average in the last month.

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