Utilities fund draws unusual spread
Chris McKhann | firstname.lastname@example.org
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)