Technology has been coming to life, and one big investor expects the move to continue in the near term.
optionMONSTER's Heat Seeker monitoring program detected unusual activity in the SPDR Technology Fund's Weekly 40 calls expiring on Aug. 29. Some 2,800 contracts were purchased for $0.12, eclipsing open interest of just 59. That suggests new positions were initiated.
These long calls lock in the price where the fund can be purchased through the end of next week, ensuring that investors won't miss a big rally. The contracts can also generate significant leverage if the fund moves in the right direction, as illustrated in our Education section.
The XLK is up 0.84 percent to $39.62 in afternoon trading. The exchange-traded fund is up 8 percent in the last three months, thanks to strong gains in companies such as Intel, Broadcom, and Facebook. That makes it the best-performing S&P 500 sector fund during that time. (See researchLAB to compare more performance metrics.)
The portfolio also tends to track the Nasdaq 100 because so many tech stocks trade on the Nasdaq. It's noteworthy that the NDX is the only major index that remained above its 50-day moving average in the market's recent pullback. This suggests that it has the most bullish momentum.
Total option volume in the XLK is 50 percent higher than its daily average for the last month, with calls outnumbering puts by more than 5 to 1.
Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.