Does Cabot Oil have further to drop?

By David Russell,

Shutterstock photo

One investor is worried about more downside in Cabot Oil & Gas.

optionMONSTER's Depth Charge tracking program detected the purchase of 2,500 November 43 puts for $1.75 and the sale of 2,000 November 45 puts for $2.80. Volume was below open interest in the 45s, indicating that an existing position was closed and rolled to the lower strike.

The investor collected a credit of $122,500 and will continue to make money if the energy stock declines further. He or she also increased the number of contracts, which will produce greater leverage in the event of a big drop. (See our Education section)

COG is down 1.25 percent to $43.29 in morning trading. The stock rallied about 50 percent between early June and early September but has been drifting lower since. Its next earnings report is scheduled for Friday morning.

Total option volume is 8 times greater than average in the name, with puts outnumbering calls by 11 to 1.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.

This article appears in: Investing Options
Referenced Stocks: COG

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