Options Trading News

May 21, 2013  Tue 9:15 AM CT

A large put trade tops the option activity in the SPDR Consumer Staples Fund as it lags the broader market today.

optionMONSTER's Depth Charge system shows that a trader bought 2,000 July 41 puts for $0.16 and sold 4,000 July 38 puts for $0.16. The volume at each strike was more than 10 times the previous open interest, so this was a new position.

The put spread--also known as a ratio because one leg has twice as many contracts as the other--cost $0.34 to open, which is the amount at risk if shares remain above $41. The maximum profit would be realized with the fund at $38, and below that the trader is effectively long shares. (See our Education section)

The XLP is up fractionally today at $41.43. The exchange-traded fund has been trending higher this year after finishing 2012 below $35 but has been slipping since reaching a hit a high of $42.20 last week. 
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. 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.

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