One investor is using options to protect a massive position in
optionMONSTER's Depth Charge market scanner detected a large
three-way trade in the Financial Select Sector exchange-traded
fund. Blocks of 95,596 contracts each traded in the June 18 puts
(sold for $0.03), the August 19 puts (bought for $0.35), and the
August 17 puts (sold for $0.09). It was the largest transaction to
cross so far today.
It appears the investor previously owned the Junes as protection on
the XLF or the members of the underlying index. He or she then
closed that position and opened a new downside spread in the August
19 and August 17 contracts. It cost a net $0.23 and will expand to
$2 if the fund closes at or below $17 on expiration. (See our
XLF is up 0.18 percent to $19.99 this morning and 22 percent so far
this year. It's been the second-best performing sector fund within
the S&P 500, trailing only health care, fueled by improving
credit and real-estate markets.
The fund holds major financials such as Berkshire Hathaway, JP
Morgan, and Wells Fargo. Total option volume is almost triple the
daily average so far today, with puts outnumbering calls by 21 to
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