Option Brief: Not even an overnight price-target hike at Imperial Capital can save Valero Energy Corporation (NYSE:VLO) today, as refiners take a sector-wide hit. At last check, the stock was off about 1%, and put volume had soared to six times the average intraday pace. Against this increased demand for options, VLO's 30-day, at-the-money implied volatility (IV) has jumped 5.9% to 38.3%.
The most active strike thus far is the stock's March 41 put, where 9,647 contracts have changed hands. The lion's share of the volume crossed in one fell swoop, as a block of 8,824 contracts traded earlier this morning above the ask price for $0.57. IV jumped 3.4 percentage points on the transaction, and only 569 contracts make up open interest here. In other words, it appears this speculator is betting on a steep pullback over the next six-plus weeks.
On the technical front, Valero Energy Corporation (NYSE:VLO) has performed well in recent months, with the shares up nearly 46% from their early Oct. low of $33.20. In light of this, perhaps today's deep out-of-the-money put buyer is a shareholder protecting her portfolio against any additional downside. Heading into the final hour of the session, VLO is trading at $48.40.
The most active strike thus far is the stock's March 41 put, where 9,647 contracts have changed hands. The lion's share of the volume crossed in one fell swoop, as a block of 8,824 contracts traded earlier this morning above the ask price for $0.57. IV jumped 3.4 percentage points on the transaction, and only 569 contracts make up open interest here. In other words, it appears this speculator is betting on a steep pullback over the next six-plus weeks.
On the technical front, Valero Energy Corporation (NYSE:VLO) has performed well in recent months, with the shares up nearly 46% from their early Oct. low of $33.20. In light of this, perhaps today's deep out-of-the-money put buyer is a shareholder protecting her portfolio against any additional downside. Heading into the final hour of the session, VLO is trading at $48.40.