Downside position in WisdomTree
Chris McKhann | [email protected]
optionMONSTER's Depth Charge system shows that a trader bought 5,000 March 17.50 puts for the ask price of $1.45 and sold 10,000 March 15 puts for the bid price of $0.45. This is clearly new activity, as previous open interest at each strike was below 900 contracts.
The trade is a ratio spread designed to profit from a limited drop in shares of the financial company, which operates exchange-traded funds. The maximum profit would come with the stock around $15 at expiration in mid-March, but below that level the trader would be on the hook to buy shares. (See our Education section)
WETF rose 0.63 percent yesterday to close at $17.46. The stock reached an all-time high of $18.22 on Tuesday but was down at $15 only a month ago.
Yesterday's put spread made up the bulk of WETF's total volume of 15,709 options, which is 10 times its daily average for the last month.