OptionsHouse

Options Trading News

December 19, 2013  Thu 9:34 AM CT

ITB: SEE CHART GET CHAIN FIND STRATEGIES
A put spread is looking for the iShares U.S. Home Construction Fund to give up yesterday's gains.

optionMONSTER systems show that a trader bought 5,000 January 22.50 puts for the ask price of $0.50 and, seconds later, sold 5,000 January 22 puts for their bid price of $0.25. Volume was well above previous open interest in each strike, so this is a new activity.

The vertical spread cost just $0.25, which is all that is at risk in the trade. If the ITB is below $22 at that expiration, the position stands to make $1.25. (See our Education section)

The ITB is off 0.64 percent to  $23.25 this morning. The exchange-traded fund was as low as $22.25 on Tuesday.

Nearly 10,800 ITB options have traded in all so far today, more than twice its full-session average for the last month. 
Share this article with your friends


OptionsHouse

Premium Services

Upcoming Webinar:

Using Options For Income

http://bit.ly/1nY1OKA

Jon Najarian and Adam Mesh of Options Wealth Machine discuss a detailed strategy utilizing credit spreads to generate income, and how any level of trader can use this simple trading technique.

Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

View more education articles »