Dan Nathan spoke on CNBC's Options Action about unusually high options activity in Schlumberger Limited. SLB. The options volume was two times higher than the average daily options volume and the most active were the weekly January 78 puts as one trader bought 10,000 contracts.
A trader paid $1.53 for the weekly January 78 puts, betting that the stock is going to trade to $76.47 or approximately 2 percent lower by Friday expiration. Schlumberger is scheduled to report earnings on Thursday so this could be a hedge for a long position going into that event.
Nathan added that the implied volatility in the name has risen close to its 52-week highs and options are becoming more expensive as traders are reaching for puts ahead of the event.
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