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Consumer staples fund faces puts

Chris McKhann (chris.mckhann@optionmonster.com)

A large put trade tops the option activity in the SPDR Consumer Staples Fund as it lags the broader market today.

optionMONSTER's Depth Charge system shows that a trader bought 2,000 July 41 puts for $0.16 and sold 4,000 July 38 puts for $0.16. The volume at each strike was more than 10 times the previous open interest, so this was a new position .

The put spread --also known as a ratio because one leg has twice as many contracts as the other--cost $0.34 to open, which is the amount at risk if shares remain above $41. The maximum profit would be realized with the fund at $38, and below that the trader is effectively long shares. (See our Education section)

The XLP is up fractionally today at $41.43. The exchange-traded fund has been trending higher this year after finishing 2012 below $35 but has been slipping since reaching a hit a high of $42.20 last week. 

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