Enormous hedge in financial fund


A gigantic put trade hit the SPDR Financial Fund just before yesterday's Federal Reserve's announcement, likely done as a cheap hedge.

optionMONSTER's Depth Charge system shows that a trader bought 205,000 August 21 puts for $0.03 and sold the same number of August 19 puts for $0.01. Giving the timing, this vertical spread was likely opened by a large player to protect against a possible negative reaction.

The put spread cost just $0.02 and would take a maximum profit with the XLF right at $19. If it falls below that strike price, the trader would be obligated to buy shares at that level. (See our Education section)

The XLF finished the day at $22.89, up 0.44 percent. It put in a 52 week high of $23.07 at the start of the month. 

More From optionMONSTER

View Comments (0)