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Retail ETF faces big put spread

Chris McKhann (chris.mckhann@optionmonster.com)

The SPDR Retail Fund was the target of a large downside position even as shares pushed higher at the end of last week.

optionMONSTER systems detected the purchase of 19,050 November 81 puts for the ask price of $1.65 and the sale of 38,100 November 77 puts for $0.57 on Friday. Volume was far above previous open at each strike, showing that this is fresh activity.

The trader spent $0.51 on this ratio spread , which is the maximum amount at risk if shares remain above $81. The maximum gain would be realized if the XRT is right at $77 at the November expiration, but below that level the trader faces the obligation of having to buy shares. (See our Education section)

The XRT was up 0.59 percent to $81.75 on Friday. The exchange-traded fund was up against resistance at $83 the previous week, almost matching its high from the beginning of August. Shares were just above the $77 level at the end of that month.

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