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Bears want to profit from inverse fund

David Russell (david.russell@optionmonster.com)

Stocks are vacillating at all-time highs, and some traders are looking for a pullback.

optionMONSTER's tracking systems detected unusual activity in the ProShares Short S&P 500 Fund, which is designed to move in the opposite direction than the broader market. Traders snapped up more than 16,000 September 28 calls on the instrument, most of which priced for $0.60 and $0.65. There was no open interest when the session began, so new positions were clearly initiated.

These long calls lock in the price where the fund can be purchased, providing potential leverage to gains in the stock price. But because it moves in the opposite direction as the S&P 500, the options are really positioning for downside in the broader market. (See our Education section)

Today's activity comes as the S&P 500 hits a record high of 1699, but then pulled back to support from last week.

The SH is up 0.11 percent to $28 in afternoon trading. Total option volume in the fund is 64 times greater than average, with calls outnumbering puts by more than 7 to 1.


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