Puts on the Select Sector Energy Fund (XLE) are seeing another day of active trading, but the fund is well off lows of the day after EU officials confirmed receiving a letter from Iran about its nuclear activities. Reports about the letter circulated earlier, but were not confirmed.

Crude oil moved sharply off the lows of the day as the news made the rounds midday Tuesday. After falling to $118 a barrel early, crude is now at $120.81 (down 60 cents on the day). In the options market, sentiment towards energy-related stocks remains relatively bearish, with volume in the XLE running 2.5 times higher than normal for this time of day. Of that, 205,000 puts and 43,000 calls have traded. The fund is battling back, however. The XLE, which holds all of the energy related companies from the S&P 500, is up 51 cents to $71.40 a share and 2.25 percent above the lows ($69.83) of the trading session.