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October 8, 2013  Tue 2:45 AM CT

The S&P Homebuilders Fund drew a large volatility play as shares fell yesterday.

A block of 23,000 March 32 calls were sold for the bid price of $1.17, according to optionMONSTER systems. This is clearly a new position, as the strike's open interest was 3,372 before the trade appeared.

A minute later, a block of 851,000 XHB shares traded for $29.95. That makes the overall strategy a delta-neutral play that is focused on volatility, rather than a specific direction in the stock. (See our Education section)

The XHB was down 1.35 percent to $29.85 yesterday, its lowest close in a month. The exchange-traded fund was above $32 three weeks ago and closed above $32 only a few times, in mid-May.

Just over 32,000 XHB options traded yesterday, more than triple its daily average for the last month.
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