Put activity surges again in bank fund

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The SPDR S&P Regional Banking Fund is seeing heavy put activity for the second session in a row as an investor hedges the sector today.

optionMONSTER's Depth Charge tracking system detected the purchase of 5,700 June 25 puts on the KRE exchange-traded fund, most of which priced for $1.52. An equal number of June 20 puts were sold at the same time for $0.40, but volume was below open interest.

That suggests that an existing position was rolled to the higher strike for $1.12, raising the level of protection by $5. The trade followed a large put spread in the KRE yesterday.

KRE is off 0.08 percent to $25.77 today. The fund is up 10 percent in the last three months as investors regain confidence in the banking sector.

Today's option trader may be using the puts to protect a long position in KRE or its member companies, many of which don't have deep option liquidity. The fund's biggest holdings include CapitalSource, Webster Financial, and Trustmark.

Overall option volume in KRE is already more than triple its daily average, with puts outnumbering calls by more than 180 to 1, according to the Depth Charge.



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.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: KRE

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