Put seller shows support for utilities
At least one trader apparently believes that downside potential is limited in the SPDR Utilities Fund.
OptionMonster's monitoring systems detected the purchase of 5,000 December 47 puts for $0.89 and the sale of 5,000 March 45 puts for $1.22 on Friday. Volume was below open interest in the December contracts, indicating that a short-put position was rolled forward by three months to a lower strike.
Short puts lock in a price where investors must buy a stock, while letting them collect premium. Traders use the technique when they like a stock and think that the risk of a big drop is limited. (See our Education section)
XLU rose 1.44 percent to $47.16 on Friday but is down 7 percent in the last three months. Overall option volume was about average in the fund.
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