Options Trading News

September 22, 2016  Thu 5:47 AM CT


A large trade is betting that the SPDR S&P Oil & Gas Exploration & Production Fund will rally in the next two weeks.

optionMONSTER's monitoring system shows that 10,000 Weekly 39 calls expiring on Oct. 7 were bought for $0.21 while 10,000 Weekly 42 calls in the same expiration were sold for $0.01 yesterday. These are clearly new positions, as volume dwarfed open interest in both strikes.

This vertical spread is looking for XOP to rally above $39 by expiration. The sale of the higher-strike contracts reduces the cost of the long calls but limits potential gains, as the trader will be obligated to sell shares if they rise above $42. (See our Education section)

XOP rose 3.59 percent to $36.81 yesterday but is down 6 percent in the last month. Overall option volume was twice the fund's daily average.

Share this article with your friends


Premium Services

Education & Strategy

Continue to melt up? Think debit call spreads

The U.S. equities market is continuing to melt up. Even though the labor market is stagnant, the Fed keeps hinting that a short term interest rate hike is coming sometime soon.

View more education articles »