Tuesday August 25, 09:35 PM
STOCKS NEWS US-Option players turn busy in industrial ETF
Stocks on the move
Real (Frankfurt: BJU.F - news) -time Equity news
U.S. stock market report
1613 ET 25Aug2009 Traders employ option plays in Industrial ETF
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Shares of the Industrial Select Sector SPDR rose 22 cents to
$25.49. One investor took hold of a large chunk of put options on the XLI, an
exchange-traded fund tied to a basket of industrial stocks, by buying 40,000
puts at the Sept $24 strike price for 25 cents apiece, said Andrew Wilkinson,
market analyst at Interactive Brokers Group. This trader may be bearish and
aims to amass profits to the downside if the XLI falls beneath $23.75 by
September expiration. But the trade may have also been tied to the purchase of
the underlying shares in the expectation that shares will continue to climb
higher.
'If this is the case, the puts were picked up as an insurance policy in the
event that the fund fails to rise,' he said. A number of option strategies were
also employed in the January 2010 contract. Plain vanilla put buying was seen
at the $24 strike where 3,500 lots cost $1.35 each. Other traders initiated a
sold put strangle involving the $25 and $26 strikes and a bullish reversal was
enacted at the $24/$26 strikes.
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