Traders apparently don't want to give up their gains in Concho
Resources now that the Texas energy stock has made a nice move.
optionMONSTER's Depth Charge tracking program detected the purchase
of 1,880 October 100 puts for $1.93 and the sale of an equal number
of October 95 puts for $0.73. Volume was below open interest in the
95s, so there are two possible explanations for the activity.
One is that the investor previously owned puts at the lower strike
protect a long position
in the shares and has now rolled it up. Alternatively, both halves
of the trade may have been opened, in which case the trade is a
that will earn profit of 317 percent on a drop to $95 or lower by
Either way, the position cost $1.20 to open and stands to profit to
the downside. (See our
section for more on how to use options as hedging instruments.)
CXO is up 1.47 percent to $104.66 in afternoon trading and has
risen 21 percent in the last three months. The company focuses on
the Permian Basin in west Texas and eastern New Mexico, and it
expects production growth to accelerate to 12 percent annually in
coming years versus a 7 percent rate since 2007.
It's been running along with other domestic energy companies as
investors grow increasingly enthusiastic about a renaissance in
energy production within the United States. (See our
market scanner for more.)
Total option volume in CXO is triple the daily average so far
today, according to Depth Charge. Puts outnumber calls by almost 2
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