Options Trading News

March 22, 2013  Fri 3:16 AM CT

A large trade is looking for a big move in the Utilities Select Sector SPDR Fund.

About 15,500 XLU options traded yesterday, nearly twice its daily average in the last month. optionMONSTER systems show that most of the volume was in just one print.

A trader bought 10,000 June 37 puts for the ask price of $0.51. This is clearly a new position, as the volume was twice the open interest in the strike before the trade appeared.

Less than a minute later, a block of 340,000 shares was purchased for $38.14. Given that the delta of the option position is -340,000, the overall trade is almost certainly a directionally neutral play that is looking for higher volatility from a sharp break up or down in the exchange-traded fund. (See our Education section)

The XLU fell 0.5 percent to $38.11 yesterday, a session after its highest close since September 2008. Shares have been running higher since bouncing off support at $34 in November.

Share this article with your friends


Premium Services

Education & Strategy

The art of trading

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.

View more education articles »