Market News

November 28, 2016  Mon 3:47 AM CT

At least one trader apparently believes that downside potential is limited in the SPDR Utilities Fund.

OptionMonster's monitoring systems detected the purchase of 5,000 December 47 puts for $0.89 and the sale of 5,000 March 45 puts for $1.22 on Friday. Volume was below open interest in the December contracts, indicating that a short-put position was rolled forward by three months to a lower strike.

Short puts lock in a price where investors must buy a stock, while letting them collect premium. Traders use the technique when they like a stock and think that the risk of a big drop is limited. (See our Education section)

XLU rose 1.44 percent to $47.16 on Friday but is down 7 percent in the last three months. Overall option volume was about average in the fund.

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