OptionsHouse

Options Trading News

November 15, 2012  Thu 9:46 AM CT

XLU: SEE CHART GET CHAIN FIND STRATEGIES
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)
Share this article with your friends


Invest Like a Monster - San Antonio: October 9-10

Premium Services

Archived Webinar

Education & Strategy

Real vs. Synthetic

We now know that there are two ways of creating a call position, a put position, and a stock position. We can simply use the actual real security or we can recreate it synthetically. We can create these positions in both long and short forms and this ability sets up an interesting scenario--an arbitrage!

View more education articles »