Energy stocks got a boost Monday as crude oil rallied 2.5 percent. But while some may view the rally as a sign of renewed strength in the beaten sector, one trader warned the selling isn't over.
"We've seen a ton of [bearish options] activity in Schlumberger in the past couple of weeks," said Keene, founder of Keene on the Market. "We saw an institution buy a large lot of the September 75-strike puts for 80 cents," he added. That's a bearish bet that the stock will fall below $74.20, or 12 percent, by September expiration. The stock is currently trading above $84.
In addition to bearish options activity, Keene said the chart of Schlumberger shows little reason to buy in. "Schlumberger has been in a clear bear channel and I think we head lower," he said. Shares of the oilfield services company are down 9 percent in the past three months.