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Pipeline fund draws large put strategy

Mike Yamamoto (mike.yamamoto@optionmonster.com)

A large put trade dominates today's unusual option activity in an obscure pipeline fund.

Total option volume in the JP Morgan Alerian MLP Index exchange-traded note is more than 6,500 contracts, which is more than 12 times its daily average in the last month. optionMONSTER systems show that a trader bought one block of 6,350 February 41 puts for $0.65 in volume that dwarfed the strike's previous open interest of just 15 contracts.

The put buying isn't tied to any stock trading identified by our systems today, though it could be hedging against a long position established earlier. This could also be an outright bearish position that is looking for the AMJ to give up some recent gains. (See our Education section)

The fund reflects the performance of energy-pipeline companies and their attractive dividends. It is down fractionally at $41.14 in early afternoon trading, right at resistance that goes back to its high of $41.68 set in February. Shares were below $38 on the last days of 2012.

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