Tesoro has been pulling back, and investors are afraid that the
slide may continue.
optionMONSTER's Depth Charge tracking program detected the purchase
of about 10,000 February 40 puts, most of which priced for $1.60.
The volume was 19 times the strike's open interest at the start of
the session, clearly indicating that this is a new position.
Those contracts lock in the price where shares can be sold in the
oil refiner. Given their low price, that gives them the potential
to generate significant leverage relative to the declines in the
TSO is up 1.54 percent to $40.84 in early afternoon trading. The
stock doubled between June and earlier this month but has been
falling over the last week.
Today's downside trades are probably the work of an investor who
owns shares and wants to
protect that position
. Protective contracts let him or her be compensated in the event
of a drop, saving him or her the difficulty of exiting and
re-entering the position. (See our
Total option volume in TSO is 6 times greater than average so far
today, with puts outnumbering calls by 8 to 1.