Call sellers target consumer fund

Chris McKhann (
August 15, 2013

Call selling tops the option activity in the SPDR Consumer Discretionary Fund as it falls again today.

Almost 5,000 December 63 calls were sold against previous open interest of 128, clearly showing that this is new activity. The big block of 2,800 contracts went for the bid price of $0.46, as did a number of smaller prints.

The calls may have been sold naked with a bearish bias. Big traders will sell naked calls on these types of exchange-traded funds because they lack the potential for big gaps higher that are seen in individual names. The contracts could also have been sold against long shares in a covered-call position . (See our Education section)

The XLY is down 1.5 percent to $58.45, on track for its lowest close since the start of July. It was at a high of $60.75 two weeks ago.

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