Options Trader Bets That XLE Will Drop At Least This Much By March Expiration

Crude oil prices dropped on Wednesday amid concerns over surging COVID-19 cases in China, the world’s top oil importer. This resulted in a sharp drop in energy stocks, including, EQT Corporation (NYSE: EQT), APA Corporation (NYSE: APA), Coterra Energy Inc. (NYSE: CTRA) and Devon Energy Corporation (NYSE: DVN).

On CNBC’s "Options Action," Dan Nathan of RiskReversal Advisors said there were 3x more puts than calls on Energy Select Sector SPDR Fund (NYSE: XLE) on Wednesday.

Don’t forget to check out our premarket coverage here.

There was a buyer of 30,000 of the March 65/55-put spreads at an average price of 55 cents per contract, Nathan mentioned.

The trader expects the Energy Select Sector SPDR Fund to decline at least 36% by March expiration.

XLE Price Action: The Energy Select Sector SPDR Fund dropped 2.2% to close at $86.02 in regular trading session on Wednesday, and lost another 0.1% in after-hours trading.

Check This Out: China's Economy Set To Grow By This Percentage Rate In 2023, Says Standard Chartered

Photo via Shutterstock.