One big investor is worried about a selloff in the banks.
optionMONSTER's Depth Charge tracking program detected the purchase
of 10,000 April 26 puts on the SPDR S&P 500 Regional Banking
exchange-traded fund for $0.94. Equal-sized blocks were sold at the
same time in the March 26 puts for $0.44 and the April 23 puts for
The activity in April resulted from a new
being opened, which will provide $3 of downside protection on the
KRE between $26 and $23. Volume in March was below open interest,
indicating that the investor previously owned those contracts as
protection and is now rolling the position forward by one month.
He or she is probably using the puts to hedge a long position in
the fund or in other stocks that track it. Yesterday's transaction
resulted in an incremental debit of just $0.29. (See our
The KRE rose 1.73 percent to $27.40 yesterday. It rallied from $19
to more than $27 between October and mid-February but has been
pulling back since then. Its biggest holdings include lenders such
as Synovus Financial, Popular, and Regions Financial.
Overall option volume in the fund was almost 5 times greater than
average yesterday, with puts outnumbering calls by 84 to 1.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.
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