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Huge put spread in new SPY weeklies

Chris McKhann (chris.mckhann@optionmonster.com)

An enormous put spread in the new weekly option series in the SPDR S&P 500 Fund was the biggest trade of yesterday's session.

It was the first day of trading for new consecutive weekly options on a handful of names, including the SPY. In the past, weekly options were released each Thursday morning for contracts expiring the following week. But yesterday the CBOE introduced options for each week out until the December expiration in 10 underlyings. (The SPX has had these consecutive weeklies for a while.)

More than 4 million SPY options traded yesterday, about twice their daily average. Puts made up 2.5 million of that action.

The big trade came in the first December weeklies, which expire in 22 days. A trader bought 40,000 of the 134 puts for $1.74 and sold 40,000 of the 128 puts for $0.50. As this was an entirely new expiration, there was no open interest.

The SPY was down fractionally on the day at $135.70, its lowest close since July 25. Shares traded up above $148 briefly in mid-September and were above $146 in mid-October.

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