Options Trading News

November 15, 2012  Thu 1:47 AM CT

A large downside position targeted an obscure mortgage real-estate investment fund yesterday.

The iShares FTSE NAREIT Mortgage Plus Capped Index Fund fell 3.4 percent yesterday finish at $13.11, its lowest close since mid-January. The exchange-traded fund, which follows the performance of the residential and commercial mortgage real estate, was at a 52-week high of $15.65 in late September.

A trader bought 8,460 December 13 puts for the bid price of $0.55 on a wide bid/ask spread, according to optionMONSTER's Depth Charge tracking system. Open interest in the strike was only 10 contracts at the beginning of the day, so this is a new position.

The put buying wasn't tied to any trading in the underlying shares as identified by our scanners. It could be a hedge against an existing long stock position or an outright bearish play looking for shares to continue falling. (See our Education section)

Overall option volume in REM totaled 8,619 contracts, compared to a daily average of just 67. Only 37 calls changed hands in the entire session.
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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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