Market News

October 3, 2013  Thu 9:12 AM CT

Despite today's market selloff and rise in volatility, put selling still seems to be the popular trade, as we see this morning in the SPDR Materials Fund.

More than 12,000 XLB October 41 puts have traded, already above its full-session daily average and topping the previous open interest at that strike. Those puts were sold, with the big block of 9,500 going for the bid price of $0.24, according to optionMONSTER systems.

The put seller sees the XLB holding above $41 through mid-October, though the trader may look to close the position before the debt ceiling is hit the day before that expiration. (See our Education section)

The XLB is down 0.73 percent to $41.99 this morning, continuing to stay in its range of the last week. The exchange-traded fund was at a high of $43.78 two weeks ago and last closed below $41 a month ago.
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Education & Strategy

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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