Valero Energy has been a superstar for months, but traders apparently believe that its glory is fading.
optionMONSTER's Depth Charge tracking system detected the purchase of almost 8,000 March 25 puts, with the large trades pricing for $0.28 to $0.30. Volume was more than twice open interest in the strike.
VLO fell 2.66 percent to $27.43 in late morning trading. It has rallied 70 percent in the last six months as widening margins lure investors back to oil refiners. But most stocks in the sector have drifted lower in the last two weeks, which could be leading some to expect that most of the gains are over for now.
There was also noteworthy selling in the March 28 and 30 calls. We can't tell if the positions were opened or closed because volume was below open interest in those strikes, but the trades still reflect doubts regarding VLO's upside potential in the near term.
The company is scheduled to appear at the Simmons 11th Annual Energy Conference tomorrow and Thursday, plus the Bank of America Merrill Lynch 2011 Refining Conference on March 10.
Overall option volume is still below average levels for the name so far in the session. The activity is bearish, however, with most of the puts bought and most of the calls sold.
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