Options Trading News

November 21, 2012  Wed 10:45 AM CT

The SPDR Energy Fund is facing a large put trade today as its shares remain in a downtrend.

More than 10,000 December 64 puts have traded against open interest of 2,755 contracts, according to optionMONSTER's systems. The big block of 8,750 was bought for the ask price of $0.22.

The put buying isn't tied to any trading shares of the exchange-traded fund that we saw today, though it could be a hedge against an existing long position in the XLE or its underlying stocks. The long puts could also be an outright bearish bet that the fund will fall below $64, which it hasn't done since June. (See our Education section)

The XLE is up fractionally at $70.41 in midday trading. It bounced off support at $68 at the end of last week but remains in a downtrend from the high above $77 reached two months ago, and it remains below its 20-day moving average.
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The covered call and unhedged risk

I have written a few things on the Covered Call Strategy over the last two weeks. Please understand that those two previous articles plus this one do not constitute a proper, fully in-depth lesson on the Covered Call Strategy like we have in our classes at Option Monster Education. I have picked out a few topics that I believe were worth noting and today I am going to add the final one.

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