OptionsHouse

Options Trading News

October 3, 2011  Mon 1:44 AM CT

XLY: SEE CHART GET CHAIN FIND STRATEGIES
The SPDR Consumer Discretionary Fund pushed back down to support at the end of last week, and a large option trade is looking for further downside.

The XLY exchange-traded fund finished Friday down 2.87 percent at $34.86, its lowest close in more than a month  and at a support area going back more than a year. Shares have been trapped between that level and $38 since coming off a 52-week high above $41 in July.

More than 48,000 options traded on Friday, 4 times the daily average for the XLY. Of that volume, 41,000 were puts and most were in a single spread. A trader bought 15,000 December 33 puts for the ask price of $1.59 and sold the same number of December 27 puts for the bid price of $0.50.

This put spread costs $1.09, which is the most that can be lost if the XLY remains above $33. To take a full profit, at expiration the shares will have to be at levels last seen in November 2009. (See our Education section)
Share this article with your friends


OptionsHouse

TRADING WEEKLY OPTIONS

The fastest money in the market
View full report »

Premium Services

Education & Strategy

Timing the Trade

Both break outs and a break downs need to have a couple things happen before it is considered a confirmed break out or break down by technical definition!  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.

View more education articles »