Market News

July 18, 2014  Fri 11:14 AM CT

A large trade is looking shares of the SPDR Homebuilders Fund to stay range-bound in coming months.

A block of 13,300 September 30 puts traded for $0.69 this morning, in the middle of the bid/ask spread, optionMONSTER systems show. This is a new position, as the volume was above the strike's previous open interest of 11,289 contracts.

Exactly a minute later, 492,100 shares of the XHB were sold for $30.82. The combination of stock and options creates on overall delta-neutral strategy that is looking for sideways trading and/or for volatility to be lower than that implied by the put prices. (See our Education section)

The XHB is up 0.88 percent to a session high of $31 in midday trading, following its lowest close since May 21 yesterday. The exchange-traded fund was above $33 at the start of the month.
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Using puts to BUY stock

Puts are an options contract that gives buyers the right to sell their stock for a set price on or before a future date. However, puts can also be an effective way to BUY stock.

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