The SPDR Materials Fund remains in the middle of its recent range despite dropping with the rest of the market today, but a huge option trade is positioning for further losses.
A trader bought 34,000 September 30 puts, almost all for the them ask price of $0.30, according to optionMONSTER's Depth Charge system. The volume was just above open interest at the beginning of the day, indicating that this is new activity.
The put buying could be outright bearish positioning. It could be also be hedging against a long position in the XLB or a long portfolio of the underlying stocks. (See our Education section)
The XLB is down 1.89 percent to trade at $34.75 after rising from $33.70 to $35.70 in the last two weeks. Shares of the exchange-traded fund have been generally trending higher from their 2012 low under $33 reached in mid-May.
Option volume is just under 44,000 contracts at midday more than twice the fund's daily average in the last month. All but about 2,400 of them are puts, a reflection of the session's bearish sentiment.
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