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Bears target metals and mining fund

Chris McKhann (chris.mckhann@optionmonster.com)

A bearish trade tops today's option action in the SPDR Metals & Mining Fund as it continues to climb off its lows.

optionMONSTER's Heat Seeker system shows that a trader bought 1,740 September 34 puts for the ask price of $0.35 against open interest of almost 5,000 contracts. At the same time, he or she sold 3,480 September 32 puts for $0.15 in volume above open interest at that strike, indicating new activity.

This put ratio spread costs the trader just $0.05, which is all that is at risk if the XME remains above $34. The maximum gain comes if shares if the XME is right around $32 at expiration in mid-September. (See our Education section)

The XME is up 1.79 percent to $37.43 in early afternoon trading, its the highest level in two months. The exchange-traded fund fell below $32 in late June but has been recovering since.

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