Huge put spread targets financial ETF
Chris McKhann | email@example.com
The XLF is up 1.13 percent to trade at $14.27. The exchange-traded fund bounced off $13.30 earlier in the month, the lowest levels for the stock since early January. It ran up to resistance at a 52-week high of $16 in late March.
A trader bought 28,888 September 13 puts for the ask price of $0.35 against open interest of 56,617, according to optionMONSTER's Depth Charge system. At the same time he or she sold 28,888 September 12 puts for the bid price of $0.17 at volume that was almost twice open interest.
If the action at the 13 strike was a closing transaction, then this is a trader rolling a short-put position down a strike. But it seems more likely that both sides of the trader were done to open positions, in which case this is a put vertical spread. (See our Education section)
In the latter case, trade cost a net $0.18, which is the most that would be lost if the XLF remains above $13 through that expiration. If shares are at or below $12 at that time, however, the position would have a gain of $0.82.