Dan Nathan Sees Unusual Options Activity In Energy ETF

Dan Nathan said on CNBC's "Options Action" that he noticed unusually high options volume in Energy Select Sector SPDR (ETF) XLE. The total options volume in the name on Wednesday was two times the average daily volume and put options volume was also twice the average daily put options volume.

When the stock was trading at $66.61, there was a seller of 10,000 contracts of the September quarterly 60 puts for 81 cents and it looked like that the seller bought to open 7,000 contracts of the September 65 puts for $2.15, said Nathan. The long put position breaks even at $62.85 or approximately 5 percent below the current stock price.

Nathan believes that it's possible that we could see Energy Select Sector SPDR (ETF) decline to lower $60s, especially if crude oil drops to around $40.