When we first experimented with option trade recommendations last October, the refiners looked like an obvious and easy target (see Why We Now Hate Refiners.) They proved all that and more, as the sector’s terrible year-to-date performance indicates.

We’re going to make option trade recommendations a standing feature of this newsletter in the weeks and months ahead, with the obvious disclaimer that they’re much more aggressive than even our Aggressive Portfolio recommendations, suitable mainly for experienced traders with the highest loss he tolerance.

And betting on further pain for refining stocks strikes us as one of the most attractive short-term opportunities in energy investing at the moment, for all the reasons Robert has outlined.

So we’re recommending the purchase of Sept. 16 Marathon Petroleum (NYSE: MPC) $45 puts at or below the recent ask of $7.10, as well as Sept. 16 Valero Energy (NYSE: VLO) $55 puts at or below the recent ask of $4.70.

The integrated oil majors have extensive refining operations too, and these will very likely act as a drag on their profitability as oil prices rebound. And, of course, if they don’t, the upstream divisions will feel even more of a pinch. In notable contrast to pure-play refiners, the oil majors are currently borrowing heavily to afford their dividends, as noted in this week’s earnings roundup.

Also unlike the refiners, the oil giants are sitting on share prices that have been incredibly resilient and have not yet priced in the risk that lousy fundamentals will persist. So even as we hang on to our recommendations of BP (NYSE: BP) and Chevron (NYSE: CVX) for the long haul, a bit of hedging here seems prudent, and speculating on considerable downside could prove rewarding.

Chevron shareholders should consider selling Dec. 16 $100 calls against their stakes at or above the recent bid of $3.75, for an equivalent of  a 10% annualized premium yield should the calls expire worthless. We also like the Oct. 21 $110 CVX puts at or below the recent ask of $12.50.

ExxonMobil (NYSE: XOM) Sept. 16 $90 puts at or below the recent ask of $5.35 look even more tempting. These stocks have been the destination of choice over the last two years for the complacent energy investor, on the theory that their deep pockets will outlast the slump. That they will do. But as the debt piles up and fundamentals upstream and downstream remain extremely challenging we expect less complacency and lower share prices in the weeks and months ahead.