What's behind put play in energy fund


As the SPDR Energy Fund falls again today, its option activity is topped by a large put trade.

The XLE is down 0.24 percent to trade at $71.63. The exchange-traded fund hit a 52-week high of $77.35 in the middle of last month, climbing from its 52-week low under $62 set in June.

A trader sold 5,000 November 70 puts for the bid price of $0.91 against open interest of roughly 10,000 contracts, according to optionMONSTER's Depth Charge system. At the same time the trader bought 10,000 November 66 puts for the ask price of $0.28. The open interest there was just 365, so that was a new opening position.

If the November 70 puts were sold to close a position, this is a roll, with the trader probably taking profits while doubling the size of the position to capture further downside. If those puts were sold to open a position, this is a new backspread that could profit if shares stay above $70 or move sharply lower. (See our Education section)

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