OptionsHouse

Options Trading News

January 4, 2013  Fri 9:28 AM CT

HYG: SEE CHART GET CHAIN FIND STRATEGIES
The iShares High-Yield Bond Fund is trading in step with the S&P 500 while a put trade tops the action.

optionMONSTER systems show that a trader bought 2,400 March 92 puts for $1.20 against open interest of more than 8,000. At the same time he or she sold 5,000 March 89 puts for the bid price of $0.45 in volume that was above that strike's previous open interest of 3,264, so that was a new position.

This could be an unusual roll higher, but it is more likely a new put vertical. That would cost the trader $0.30, which would be at risk if shares remain above $92. The maximum gain for this ratio spread would come if the HYG is around $89 at that expiration. (See our Education section)

The HYG off 0.09 percent at $93.84 this morning, a day after reaching its highest level since July 2008. The exchange-traded fund hasn't seen the $89 area since it came off 52-week lows back in June. The HYG typically has a high correlation with the S&P 500, and it is now at 0.95.
Share this article with your friends


Related Stories

HYG

Notable option activity in equity names

January 28, 2016

Nearing the halfway mark in today's session, here are the individual equity names with unusual option activity on optionMONSTER's ActionTracker data system.

OptionsHouse

Premium Services

Upcoming Webinar:

How to Defend Your Portfolio and Profit in a Market Selloff

http://bit.ly/1OSMWU6

Jon Najarian and Sandy Chaikin of Chaikin Analytics demonstrate how to play defense when the market is selling off. And, how to turn misery into money, whether investing in stocks or trading options.

Education & Strategy

The sweet spot

When using the Stock Replacement Strategy, we must remember that in reality, we are doing a STOCK trade. We are just using options. We are replacing the stock position with an option position (long calls).

View more education articles »