Stocks quoted in this article:
Marathon Petroleum (MPC - 31.16) saw an unusual climb in put volume yesterday, after Simmons Co. slashed its fourth-quarter earnings forecast for the firm. Close to 5,700 of these options crossed the tape, reflecting eight times the equity's average daily volume. More than 3,500 puts were traded at the out-of-the-money February 30 strike -- the majority of them at the bid price, pointing to seller-driven activity. Open interest on this put jumped by 3,248 contracts overnight, suggesting that most of the volume at this strike consisted of new positions. This option is now home to peak back-month put open interest of 4,422 contracts. By selling these calls to open, speculators are betting that MPC will finish north of $30 by the time February options expire.
A closer look at the petroleum giant's sentiment backdrop shows a bullish bias toward MPC. The Schaeffer's put/call open interest ratio (SOIR) checks in at 0.72, indicating that calls comfortably outnumber puts among options set to expire within three months.
What's more, data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows that MPC's 10-day call/put volume ratio stands at 59.52. This confirms that calls bought to open have outnumbered puts by a whopping 59 to one during the past couple of weeks.
From a technical perspective, MPC has underperformed the broader S&P 500 Index (SPX) by nearly 18% during the past 40 sessions. On the charts, the stock is trading beneath its 10-day and 20-day moving averages, which have served as both support and resistance since the Wall Street rookie became an independent company from Marathon Oil Corporation (MRO) in late June.
At the start of the session, however, MPC is up about 0.7% to flirt with the $31.16 level.