Learn the trade here. Make it on tradeMONSTER

Options Trading News

May 23, 2013  Thu 4:45 AM CT

XLK: SEE CHART GET CHAIN FIND STRATEGIES
Investors are using options to adjust huge bullish positions in large sectors at low cost.

optionMONSTER's Heat Seeker tracking program detected heavy call volume in the SPDR Technology (XLK) and the SPDR Financial (XLF) exchange-traded funds. The trades were very similar and occurred less than 10 minutes apart, so they may have been the work of a single large institutional player.

First, the traders sold 20,000 June 32 calls on the XLK for $0.51 and bought a matching number of July 33 calls for $0.27. The next transaction involved the sale of 60,650 XLF July 20 calls for $0.55 and the purchase of 60,650 August 21 calls for $0.27.

In both cases, volume was below open interest in the nearer-dated contracts that were sold. This suggests that existing long positions were closed and rolled forward in time. The XLK trade generated a credit of $0.24, and the XLF roll yielded $0.28.

Adjusting their positions let the investors take some money off the table while adding a month of long exposure. They also reduced the amount of money they could lose in the event of a short-term pullback because the new contracts have lower deltas and are less susceptible to time decay. (See our Education section)

The XLK fell 1.09 percent to $31.75, and XLF declined 1.05 percent to $19.83.

The transactions were the largest in both funds. Total option volume was triple the daily average in both, as well.

Share this article with your friends


Related Stories

XLK

Tech fund attracts big upside bet

April 17, 2014

Traders are snapping up calls in the SPDR Technology Fund, which includes big names such as Apple, Microsoft, and Google.

XLK

Largest option trades in equities

April 11, 2014

Nearing the halfway mark in today's session, here are the individual equity names with the most call and put buying on optionMONSTER's ActionTracker data system.

XLK

Largest option trades in equities

April 3, 2014

Nearing the halfway mark in today's session, here are the individual equity names with the most call and put buying on optionMONSTER's ActionTracker data system.

XLK

Huge upside trade in tech sector

April 3, 2014

The SPDR Technology exchange-traded fund yesterday reached its highest price since February 2001, when the sector was in the midst of collapsing from the late-1990s tech bubble.

TRADING WEEKLY OPTIONS

The fastest money in the market
View full report »

Premium Services

Education & Strategy

Options and high-frequency trading

There has been much talk lately of high-frequency trading (HFT) and what it does--or doesn't--mean to the markets and retail...

View more education articles »
optionMONSTER stockMONSTER tradeMONSTER