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Financial ETF sees large put buying

Chris McKhann (chris.mckhann@optionmonster.com)

The SPDR Financial Fund hit multi-year highs yesterday, but its option activity was topped by a large bearish trade.

optionMONSTER systems show that a trader bought 27,488 May 16 puts for the ask price of $0.22. Open interest in the strike was just 717 contracts before the session began, so this is clearly a new purchase.

The put buying wasn't tied to any trading in the underlying shares identified by our systems yesterday. It could be an outright bearish play or a hedge on an existing position in the XLF or in the stocks that make up the exchange-traded fund.

Regardless, these options will turn a profit if the fund is below the $16 strike price by expiration in mid-May. (See our Education section)

The XLF finished the day down 0.34 percent to $17.55 but hit $17.67 earlier in the session, its highest level since October 2008. It has been trending higher from support around $13.50 since early June.

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