Penn West Exploration Ltd. (NYSE: PWE, 5.93) is a Calgary, Alberta based oil and natural gas production company.  Penn West’s operational area is concentrated in the Western Canadian Sedimentary Basin, an area considered to house some of the world’s largest petroleum reserves.

A Little Background

2014 has not been a bright year for Penn West investors – PWE shares are down over 31%.  Interestingly, this entire decline has occurred over the last few months, with shares of their June 20 high of $10.14.  PWE shares have traded in a 52-week range of $$5.86-$11.75, trading an average volume of about 2.5 million shares per day. 

What We Saw

Monday’s session saw a flurry of bearish activity in PWE options, with multiple orders coming across the tape in the PWE Mar 6 line.  OptionHacker flagged an initial order of 7,869 Mar 6 Puts trade for $0.80 at 11 am EST.  A few minutes later, 5,007 more of the same contracts traded for $0.85.  Another 1,498 block would trade at this same price at 11:05 am EST.  Shortly before 1 pm EST, another 6,233 PWE Mar 6 contracts traded with the buyer paying $0.90.  

20,607 PWE March 6 Put contracts traded in these 4 orders, representing $1,743,415 in total premium outlay, showing at least one institution believe PWE shares will be trading below 6 at March expiration. 

Market Update

PWE stock opened Tuesday’s session down a dime, or about 1.7%, with the market on the Mar 6 Puts $0.85-$0.95.

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