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Real-estate ETF draws volatility play

Chris McKhann (chris.mckhann@optionmonster.com)

A large trader is looking for lower volatility in the iShares U.S. Real Estate Fund as it climbs to highs.

optionMONSTER systems show that a single print of 4,500 June 70 puts was sold for $2.58 this morning. This is clearly a new position, as open interest in the strike was just 873 before the session began.

Less than a minute later, a block of 292,500 IYR shares appears to have been sold for $68.9638. The combination of stock and options creates an overall position that is delta-neutral , meaning that the trader is looking for actual volatility to be less than that implied by the option price. (See our Education section)

The IYR is up 0.5 percent to $69.10, its highest level since June 2008. Shares of the exchange-traded fund have been climbing off support at $61 in the last four months.

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