Options Trading News

August 27, 2013  Tue 3:16 AM CT

A large position is looking for more volatility in the SPDR Energy Fund.

optionMONSTER systems show that a trader bought 9,500 December 78 puts for the ask price of $2.07. The volume was almost 3 times higher than the previous open interest at that strike, so it is a new opening position.

Just after the puts changed hands, the largest block of XLE stock as more than 300,000 shares traded for $82.12. So it appears that the puts were traded against the stock in a long-volatility play. (See our Education section)

The XLE was down fractionally to close yesterday at $81.62 after bouncing off support at $80 last week. Shares of the exchange-traded fund have found resistance at $84 in the last several months, posting a high just above that level in late July.

More than 46,000 XLE options traded on the day, compared to a daily average of 14,123.
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The art of trading

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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