OptionsHouse

Options Trading News

January 15, 2013  Tue 4:15 AM CT

HYG: SEE CHART GET CHAIN FIND STRATEGIES
The iShares High-Yield Corporate Bond Fund doesn't show up on our tracking systems often, but yesterday it saw heavy option activity that signaled bullish sentiment toward the market.

Traders focused primarily on a select few strikes, starting with the June 95 calls, according to optionMONSTER's Heat Seeker tracking system. They then shifted to the January 94 calls, which were sold, while the February 95 calls were bought as a bullish position was adjusted.

Long calls lock in the price where investors can buy shares in the fund, so if it goes up those contracts will generate some nice leverage. But these options will also expire worthless if the stock fails to move by their expiration dates. (See our Education section)

The HYG fell 0.14 percent to $94.39 yesterday but is trading at its highest levels since the 2008 crash. The junk bonds held in the exchange-traded fund tend to follow the S&P 500, so these call buyers were actually looking for the stock market to keep climbing.

Almost 18,000 total options changed hands in the fund yesterday, more than triple its daily average in the last month. Calls outnumbered puts by 16,700 to 1,200, a reflection of the session's bullish sentiment.

(A version of this post appeared on InsideOptions Pro yesterday.)
Share this article with your friends


Related Stories

HYG

Is now the time to buy junk bonds?

February 26, 2015

The iShares iBoxx High-Yield Corporate Bond Fund holds debt securities from a wide range of issuers, but energy is the second-biggest sector.

HYG

Notable option activity in equities

February 26, 2015

Nearing the halfway mark in today's session, here are the individual equity names with unusual option activity on optionMONSTER's ActionTracker data system.

HYG

Downside play in high-yield bonds

January 29, 2015

A near-term downside play is dominating today's option activity in the iShares High-Yield Bond Fund, which tends to have a high correlation with the S&P 500.

OptionsHouse

Premium Services

Webinar Recording

Turbo Charge Your Trading Profits

Education & Strategy

The Strike-Based Greeks

The other Greeks (Gamma, Vega, and Theta) are calculated by using month and strike data, and not by individual option. These are called strike-based Greeks. Gamma, Theta, and Vega are all strike-based Greeks

View more education articles »