Tony Zhang Sees Unusual Options Activity In XOP

On CNBC's "Options Action," Tony Zhang said he saw some action in SPDR S&P Oil & Gas Exploration & Production ETF XOP on Wednesday. Even though the ETF has broken out on the upside quite a bit over the last couple of days, one trader reaffirmed what looks like a fairly bearish outlook for the industry.

XOP trades almost 40,000 contracts per day, but on Wednesday, 220,000 contracts were traded and about 50% of that volume was from a single trader. The trader already owns 85,000 contracts of the December $60 puts and on Wednesday she or he rolled 55,000 contracts of the December $70 puts for $1.70, laying out additional $5.6 million in premium, said Zhang. The trade breaks even at $68.30 or around 24% below the current stock price.