Trader bets nearly $1 million on more pain for this beaten Dow stock

What's behind one trader's $1M bet against Chevron?

It's been a tough year for Chevron shareholders, and one trader is betting on even more pain ahead.

Energy is the worst-performing sector in 2017, with more than 90 percent of its constituents trading in a correction or worse, including Chevron.

The stock was feeling even more pressure this week after CEO John Watson announced his departure from the company.

"After the announcement that the CEO was planning to step down, there was a large [bearish options trade]," Dan Nathan said Tuesday on CNBC's "Fast Money. "

One trader bought 10,000 Sept. 8 weekly 105-puts for 90 cents each. Since each put option accounts for 100 shares of stock, that is a $900,000 bet that Chevron shares will fall below $104.10 by September expiration — nearly 3 percent lower from Wednesday's trading level.

According to Nathan, that bet is "just for two weeks. So to me, when I see that sort of activity, that's either a trader making a short-term bearish bet or possibly some protection against a long position."

When you look at a chart of Chevron stock, "it's actually a train wreck. It's down 11 percent from its 52-week highs," Nathan said. "If you look at this support [level], it's around $100, so maybe this trader is looking for some protection in the near term for the stock to possibly go back to its support at $100." The oil giant is one of the worst-performing Dow stocks this year.

Chevron shares were trading at the $106.96 level midday Wednesday.

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