The real-estate sector is back to a key resistance level, and
one investor is worried about a pullback.
optionMONSTER's Depth Charge tracking program detected the purchase
of 3,250 March 60 puts on the iShares Dow Jones U.S. Real Estate
Index Fund for $2.75. An equal number of March 50 puts was sold at
the same time $0.90. Volume was more than triple open interest at
The trade resulted in a cost of $1.85 and will earn a maximum
profit of 441 percent if the fund closes at or below $50 on
expiration. It's known as a
bearish put spread
because it leverages a move between two price points, in this case
from $60 to $50.
IYR, which owns real-estate investment trusts including Simon
Property and American Tower, fell 0.11 percent to $65.37 yesterday.
Unlike many sectors, REITs have yet to recover from the 2008 market
crash. But they've been strong in the last six months and the fund
is now hovering slightly above its peaks from 2011.
Based on that performance, Thursday's trade was probably the work
of an investor who's made money in fund and now wants to guard
against a pullback. See our
for more hedging strategies.
Puts outnumbered calls in IYR by almost 2 to 1 yesterday, which
reflects the negative bias.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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