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• Oil-drilling fund draws big downside bet
• Puts used to hedge energy-driller fund
• Top index, ETF option volumes at midday

• XOP 0% Rate It

Oil producers have been rallying hard, but one large trade today is bearish.

optionMONSTER's Depth Charge tracking program detected a surge of put buying in the SPDR S&P 500 Oil & Gas Exploration & Production exchange-traded fund, which tracks energy producers such as Chevron and Denbury Resources. Most of the activity focused on the May 60 contracts, which traded more than 15,000 times, with the largest blocks pricing for $2.13 to $2.25. There was no open interest in the strike when the session began.

XOP fell 1.06 percent to $61.21 in morning trading, but has climbed more than 17 percent during the last three months amid a surge in oil prices. The fund appears to be hitting resistance around the same level where it peaked last month, which could make some chart watchers think it's done going up for now. It had outperformed the broader energy sector since last summer.

Overall options volume is more than 6 times greater than average so far today, with puts outnumbering calls by a bearish 9-to-1 ratio, according to Depth Charge.

(Chart courtesy of tradeMONSTER)

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