Retail fund draws downside position

optionMONSTER

Just after the SPDR Retail Fund hit an all-time high this week, a trader is positioning for potential drop.

optionMONSTER's Depth Charge system detected the purchase of 2,567 August 78 puts for the ask price of $0.69 and the sale of 5,134 August 75 puts for the bid price of $0.25. Volume was more than 10 times the previous open interest at each strike, clearly indicating new activity.

The trade, known as a ratio spread because twice as many contracts were sold than were bought, cost $0.19 to open. That is the maximum risk if shares remain above $78, while the maximum gain would be realized if shares are right at $75 upon expiration in five weeks. (See our Education section)

The XRT was down fractionally to $80.64 yesterday. The exchange-traded fund was down to that $76 level three weeks ago but posted a lifetime high of $81.35 on Tuesday.

More than 21,000 XRT options changed hands, about 4 times its daily average for the last month.


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