OptionsHouse

Options Trading News

July 10, 2013  Wed 4:14 AM CT

XLF: SEE CHART GET CHAIN FIND STRATEGIES
An enormous put spread is positioning for a drop in the SPDR Financial Fund.

optionMONSTER systems show that 839,000 XLF options changed hands yesterday, compared to a daily average of 131,000 contracts in the last month. Most of the volume came in one four-way play.

A trader sold 95,596 August 19 puts for the bid price of $0.15 and bought the same number of August 17 puts for $0.04, with volume below the previous open interest in each strike. At the same time, the trader bought 95,596 October 19 puts for the ask price of $0.41 and sold the October 17 puts for $0.12 in volume above open interest at both strikes, indicating new positions.

The strategy was repeated just under an hour later with blocks of 73,574 for slightly lower prices.

The trader is rolling a put vertical spread out two months in time, spending an additional $0.18 for the adjustment. The resulting position would be worth $2 if the XLF is below $17 at expiration in mid-October. (See our Education section)

The XLF rose 0.85 percent to $20.14, its second-highest close. Shares dipped below $19 two weeks ago, and the exchange-traded fund was under $17 at the beginning of the year.
Share this article with your friends


Related Stories

XLF

Put buying shows caution in financials

September 27, 2016

Traders are positioning for a possible drop in the SPDR Financial Fund, which is up 9 percent in the last three months.

XLF

Calls buyers charging into financial fund

September 21, 2016

Heavy October trading is looking for gains in the SPDR Financial Fund, which has risen 4 percent in the last three months.

XLF

Will financials head higher by Christmas?

September 20, 2016

The SPDR Financial Fund has risen 5 percent in the last three months, and traders are looking for more gains by the end of the year.

OptionsHouse

TRADING WEEKLY OPTIONS

The fastest money in the market
View full report »

Premium Services

Education & Strategy

Using spreads to minimize risk

Last week we discussed the risk vs reward profile of a debit call spread in Wells Fargo (WFC). This week we will run thru the risk vs reward of selling a credit put spread to achieve the same exposure of that debit call spread.

View more education articles »