By Chris McKhann
Exxon Mobil (NYSE:XOM) rebounded off support levels yesterday, but a big put spread was positioned for the stock to give up the rest of the gains of the year. XOM finished the day at $71.15. The oil and gas giant was down 1.4 percent but off the lows of the day, which were right at support. The stock, which was trading at $85 at the end of July, has held up for all but one close since November.
Option volume in XOM was led by a large put spread. A trader bought 6,000 October 67.50 puts for $2.04 and at the same second sold 10,500 October 62.50 puts for $1.07. The previous open interest at both strikes had been less than 3,000 contracts, so this was a new opening spread.
There was no clear trading in the stock tied to this option position, which is a bet that XOM will fall to $62.50 by the October expiration. But because of the ratio it is a lower-cost bet and shows that the option trader is willing to get long shares if they fall below that level.