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What put surge means for materials fund

Chris McKhann (chris.mckhann@optionmonster.com)

The SPDR Materials Fund has been pushing back toward the resistance levels from the last six weeks, but put buying tops its option activity today.

More than 20,000 April 34 puts have traded against open interest of 3,798, according to optionMONSTER's Depth Charge system. The puts were  bought for $0.18 and $0.19 in institutional blocks.

The XLB trades at $37.19 this afternoon, up 0.46 percent on the session. The exchange-traded fund bounced off support at $36 last week and is in the middle of the tight range of the last two months with that resistance at $38 which hasn't been breached since July.

Today's put buying could be an outright bearish play on the fund, but it is also very possible that the options were traded against stock. This could either be a protective hedge on long shares or a volatility play that could profit if the stock moves sharply higher or lower. (See our Education section

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