Market News

October 5, 2012  Fri 2:45 AM CT

The SPDR S&P Retail Fund is pushing back toward last month's highs, but yesterday's option activity was positioning for a possible fall.

More than 11,000 December 53 puts traded against open interest of just 122 contracts, clearly new positions. A trader bought blocks of 8,500 and then 1500 of the puts for $0.24, according to optionMONSTER's Depth Charge tracking system.

The XRT gained 1.57 percent yesterday to close at $63.55. The exchange-traded fund hit an all-time high of $65.47 last month, climbing from a low of $44 a year ago.

The put buying could be an outright bearish bet on the XRT or it could be hedging against a long position in the stock. The latter would ultimately be bullish, as it has a similar payoff to a long call position. (See our Education section)

Total option volume in the XRT was 39,393 contracts, compared to a daily average of 1,450.
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Using puts to BUY stock

Puts are an options contract that gives buyers the right to sell their stock for a set price on or before a future date. However, puts can also be an effective way to BUY stock.

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