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Trader looks for big move in loan ETF

Chris McKhann (chris.mckhann@optionmonster.com)

A trader is looking for a sharp move in the PowerShares Senior Long Portfolio Fund.

The lone print in the October 24 puts dominates today's option activity in BKLN, which invests in senior loans. optionMONSTER systems show that that trade was twice the total open interest in the name and has already eclipsed its full-session average.

A trader bought 3,000 of those puts for the ask price of $0.20 on a wide bid/ask spread. The fund's stock volume spiked shortly after, with shares bought for $24.95. The overall combination of stock and options creates a delta-neutral strategy that would profit from higher volatility . (See our Education section)

BKLN, which was at a high of $25.32 a month ago, is down fractionally to $24.93 this morning and is on pace for the lowest close of 2013. The exchange-traded fund is in the middle of its range of the last eight months, and today's trade appears to be looking for it to move back to one of the extremes. 

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