OptionsHouse

Options Trading News

May 14, 2012  Mon 2:14 AM CT

HYG: SEE CHART GET CHAIN FIND STRATEGIES
One investor is worried that selling pressure may spread to junk bonds, which have held their ground despite volatility in the stock market.

optionMONSTER's Depth Charge tracking system detected the purchase of 3,600 June 87 puts for $0.40 on the iShares iBoxx High-Yield corporate bond fund. An equal number of June 83 puts were sold at the same time for $0.15. Volume was above open interest at both strikes.

Known as a bearish put spread, the trade cost $0.25 and will earn a maximum profit of 1,500 if HYG closes at or below $83 on expiration. It hasn't seen that level since last November. (See our Education section)

The exchange-traded fund rose 0.25 percent to $90.81 on Friday, and has been fluctuating between about $89 and $92 for the last three months. Because of their leverage and sensitivity to the business cycle, junk bonds tend to follow the performance of the equity market.

Overall option volume in HYG was 5 times greater than average in the session, according to the Depth Charge. Puts outnumbered calls by 41 to 1.
Share this article with your friends


Related Stories

HYG

Is now the time to buy junk bonds?

February 26, 2015

The iShares iBoxx High-Yield Corporate Bond Fund holds debt securities from a wide range of issuers, but energy is the second-biggest sector.

HYG

Notable option activity in equities

February 26, 2015

Nearing the halfway mark in today's session, here are the individual equity names with unusual option activity on optionMONSTER's ActionTracker data system.

OptionsHouse

Premium Services

Webinar Recording

Turbo Charge Your Trading Profits

Education & Strategy

The Strike-Based Greeks

The other Greeks (Gamma, Vega, and Theta) are calculated by using month and strike data, and not by individual option. These are called strike-based Greeks. Gamma, Theta, and Vega are all strike-based Greeks

View more education articles »