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



The fastest money in the market
View full report »

Premium Services

Archived Webinar

Education & Strategy

The covered call and unhedged risk

I have written a few things on the Covered Call Strategy over the last two weeks. Please understand that those two previous articles plus this one do not constitute a proper, fully in-depth lesson on the Covered Call Strategy like we have in our classes at Option Monster Education. I have picked out a few topics that I believe were worth noting and today I am going to add the final one.

View more education articles »