One investor is looking for the banking sector to take a dive.
optionMONSTER's Depth Charge tracking system detected the purchase
of 44,453 June 23 puts on the SPDR S&P 500 Bank exchange-trade
fund for $0.83. An equal number of June 23 calls were sold at the
same time for $0.68. Volume was more than 90 times open interest in
each strike, and the transaction was the largest in the option
market so far today.
The trade cost $0.15 and is tantamount to shorting KBE at $22.85.
The investor may own the fund and wants to
hedge against a pullback
in the next two months. This way the gains from the options will
cover any losses, but the position will also require the trader to
sell the stock if it jumps. (See our
KBE is down 1.21 percent to $22.93 in morning trading. It rallied
20 percent in the first three months of the year but has been
struggling since then. The fund is now pushing below its 50-day
moving average and is hitting resistance at its 30-day average,
which could be leading some chart watchers to believe that it's at
risk of a drop.
Overall option volume in the security is more than 500 times
greater than average so far today. KBE tracks a broad array of
banking names, including Bank of America, Regions Financial, and JP
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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