Market 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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Education & Strategy

Using puts to BUY stock

Puts are an options contract that gives buyers the right to sell their stock for a set price on or before a future date. However, puts can also be an effective way to BUY stock.

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