As crude oil prices have deteriorated this past week, oil refiners have broken out.
Shares of Valero and Marathon Petroleum surged to 52-week highs Monday when crude oil fell to its lowest level since April. But some traders are betting one of these stocks may have come a bit too far too fast.
On Monday, when Valero shares hit their highest level since 2007, put volume in the stock ran 1.5 times its daily average, and one trader made a bearish bet that the stock could fall as much as 2 percent by Friday. Specifically, that trader purchased 4,000 of the July 10 weekly 65-strike puts for 90 cents each. Since buying a put is a bearish strategy that allows a trader to sell a stock at a given price at a set time, this trade is profitable if Valero falls below $64.10 by Friday. On Tuesday morning, it was trading $65.50.
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