OptionsHouse

Options Trading News

September 26, 2012  Wed 10:47 AM CT

XLF: SEE CHART GET CHAIN FIND STRATEGIES
Traders are getting nervous about financials as the market continues to struggle.

optionMONSTER's Depth Charge monitoring system detected the purchase of 50,000 December 15 puts in the Select Sector Financial SPDR exchange-traded fund for $0.41. An equal number of December 13 puts was sold at the same time for $0.10, lowering the cost of the trade to $0.31.

The position will generate more than 540 percent in profits if the XLF closes at or below $13 on expiration. (See our Education section for more on the strategy, which is known as a vertical spread because it leverages a move between two prices.)

The XLF is down 0.47 percent to $15.52 today and has been retreating from a 52-week high of $16.44 earlier in the month. The fund holds stakes in companies including Wells Fargo, Berkshire Hathaway, and JP Morgan. It's often used as a hedging tool by investors with broad sector exposure and is one of the most heavily traded underliers in the market.

The bearish spread was the largest transaction to cross our systems so far today and was cited by Jon "DRJ" Najarian earlier on our InsideOptions Pro service. Puts outnumber calls in XLF by 6 to 1 so far today, according to the Depth Charge.
Share this article with your friends


Related Stories

XLF

Put buying shows caution in financials

September 27, 2016

Traders are positioning for a possible drop in the SPDR Financial Fund, which is up 9 percent in the last three months.

XLF

Calls buyers charging into financial fund

September 21, 2016

Heavy October trading is looking for gains in the SPDR Financial Fund, which has risen 4 percent in the last three months.

XLF

Will financials head higher by Christmas?

September 20, 2016

The SPDR Financial Fund has risen 5 percent in the last three months, and traders are looking for more gains by the end of the year.

OptionsHouse

Premium Services

Education & Strategy

Using spreads to minimize risk

Last week we discussed the risk vs reward profile of a debit call spread in Wells Fargo (WFC). This week we will run thru the risk vs reward of selling a credit put spread to achieve the same exposure of that debit call spread.

View more education articles »