Market News

October 14, 2016  Fri 5:47 AM CT

A trader is increasing a downside position in the SPDR KBW Regional Banking Fund.

optionMONSTER's monitoring program shows that 1,540 October 42.50 puts were sold for $1.02 while 3,080 October 41 puts were purchased for $0.38 yesterday. Volume was below open interest in the higher strike, indicating that a bearish position was rolled to a lower strike and doubled in size.

Long puts lock in the price where a stock can be sold, so they make money if shares decline. Investors use them to hedge long positions or to speculate on a drop. (See our Education section)

KRE fell 2.43 percent to $41.79 yesterday but is up 6 percent in the last three months.

Overall option volume was 3 times greater than average in the name yesterday. Puts outnumbered calls by a bearish 6-to-1 ratio.

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Using puts to BUY stock

Puts are an options contract that gives buyers the right to sell their stock for a set price on or before a future date. However, puts can also be an effective way to BUY stock.

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