Option Bear Exits as Chevron Corporation (CVX) Tests $100

A big block of Chevron Corporation (CVX) puts was sold to close earlier


Published on Jan 30, 2015 at 2:53 PM
Updated on Apr 20, 2015 at 5:32 PM

Chevron Corporation (NYSE:CVX) is among the biggest Dow decliners this afternoon, off 2% to trade at $100.94, after posting its lowest quarterly profit since 2009 -- though per-share earnings did top estimates -- and halting its 2015 share buyback program. Earlier, in fact, the stock tanked to $98.88, marking its first foray into double-digit territory in more than two years. As such, puts are crossing the tape at nearly three times the usual intraday rate, and outstrip calls by a healthy margin.

Digging deeper, it appears one speculator is closing out his bearish position. Specifically, a block of 1,708 March 100 puts was sold to close around lunchtime, according to data from the International Securities Exchange (ISE). In other words, the trader is taking his skeptical bet off the table, with the stock now sitting just above $100 -- perhaps satisfied with his gains, and concerned the round-number century mark may act as support as it did in mid-December.

Take a step back, put buying has been the strategy of choice among recent CVX options traders. The stock's 10-day put/call volume ratio across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) checks in at 1.54 -- just 11 percentage points from a 12-month peak.

In other news, sector peer Occidental Petroleum Corporation (NYSE:OXY) is rallying this afternoon, amid crude oil's 8% rebound and a day after its CEO took a shot at Chevron Corporation (NYSE:CVX). Specifically, during a conference call, the executive was asked whether his company may be acquired by one of its larger rivals -- to which he quipped, "I looked at Chevron and they don't have any free cash." To counter, CVX CEO John Watson said the company is "actively screening [M&A] opportunities ... and we'll take advantage of opportunities that we see."

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