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Options Traders Bet Against REIT ETF


The iShares Dow Jones US Real Estate (IYR) rose on Friday in a largely “red” day but we saw interest in downside puts among ETF options traders. The real estate investment trust ETF is currently trading around its 50-day moving average.

Year to date, REITs have fared well, with IYR climbing 12.33% versus the S&P 500 rallying 12.34% during the same time frame. We also note that the ETF sports a 3.41% yield (versus 1.98% in the S&P 500).

The relative strength of the REIT fund versus the broad market has been evident in the past month (IYR down 1.38% versus S&P 500 down 3.50% during same time frame).

Put buyers on Friday crept into the picture during the session as IYR challenged its 50 day moving average ($64.87) before reverting and falling back. The ETF is down about a half a percent this morning in the early going.

IYR as well as related REIT ETFs including VNQ (Vanguard REIT), ICF (iShares Cohen & Steers Realty Majors), RWR (SPDR DJ REIT), and REM (iShares FTSE NAREIT Mortgage REIT) have been attractive to investors evidently in 2012, because the sector generally sports higher than average dividend yield versus broader market equities.

On another note, XLF (SPDR Financials), is not strictly relegated to owning Banks, Brokerages, Investment Managers, and the like, although some may have this misconception. For example, top holding in IYR (SPG – Simon Property Group) is the 9th largest holding in XLF (2.43%) weighting, and the REIT sub-sector itself has a 12.99% weighting in the ETF. No doubt, broader Financials as well as related subsectors including REITs will likely continue to see flurries of activity heading into the end of the year post the U.S. elections.

iShares Dow Jones US Real Estate

For more information on Street One ETF research and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com.