Options Trading News

November 15, 2012  Thu 9:46 AM CT

An odd call spread tops the options trade in the SPDR Utilities Fund after its recent drop.

The XLU trades at $34.32, up fractionally this morning and holding above the lows of the last three days. The exchange-traded fund was above $37 at the start of the month and at a four-year high of $38.54 on Aug. 1. Yesterday's close was its lowest since November 2011.

optionMONSTER's systems show that 23,500 January 35 calls traded for $0.33 and 6,882 January 36 calls went for $0.13. Given the prices, it appears that the 35s were sold and the 36s bought.

This credit spread appears to be selling the January 35 calls to collect the premium and buying some limited protection against a further bounce. (See our Education section)
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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.

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