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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. 
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Options Academy: At the Break

So far, my articles have taken you through a logical progression of option theory and fundamental concepts of options. As of yet, I have not mentioned a single strategy and for a good reason! The actual application of a strategy should come AFTER you learn about the option product itself.

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