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Massive wager on real estate fund

David Russell (david.russell@optionmonster.com)

Real-estate shares have been holding their ground all month, and one investor thinks there is no going back.

optionMONSTER's monitoring systems detected the sale of 75,000 April 69 puts on the iShares Dow Jones Real Estate fund for $0.47 against open interest of just 8,918 contracts. It was by far the largest trade to appear in the market so far today.

The investor is essentially betting that the fund will remain above $69 over the next three weeks. If they're right, they'll keep the $0.47 and the puts will expire worthless. If they're wrong they'll have to buy shares for $60, but including the credit earned, their entry price would be $68.53.

He or she probably believes there is little downside risk in the fund, which focuses on large real-estate investment trusts such as Simon Property and American Tower. This way, if it does pull back, they will enter below the current market price, and if it doesn't they'll keep the credit. See our Education Section for more on how to manage trades more effectively with options.

IYR rose 0.27 percent to $69.35 in early afternoon trading. It's up 7 percent so far this year, but has gone where for all March.

Total option volume is triple the daily average in the fund so far today, with that put sale dominating the activity.

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