Options Trading News

December 19, 2013  Thu 9:34 AM CT

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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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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