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October 5, 2012  Fri 2:45 AM CT

XRT: SEE CHART GET CHAIN FIND STRATEGIES
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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Options Academy: At the Break

So far, my articles have taken you through a logical progression of option theory and fundamental concepts of options. As of yet, I have not mentioned a single strategy and for a good reason! The actual application of a strategy should come AFTER you learn about the option product itself.

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