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What's behind heavy QQQ put action

Chris McKhann (chris.mckhann@optionmonster.com)

A large put trade dominates today's option activity in the PowerShares QQQ Trust.

A trader sold 13,500 June 65 puts for the bid price of $1.01 against previous open interest of 15,000 contracts and bought 13,500 June 60 puts for the ask price of $0.35, according to optionMONSTER systems.

The volume in the June 60s was well above the open interest of 8,767 in that strike, so that is a new position. If the 65 puts were sold to open a new position as well, this is a credit spread .

That spread would be looking for the QQQ to remain above $65 through the June expiration to keep the credit received as profit. If those puts were sold to close a position, then the trader is taking profits and rolling the position to the lower strike. (See our Education section)

The QQQ is down fractionally to $68.70 in midday trading. It has been trapped in a tight range for the last two weeks after bouncing from support at $66. Shares gapped up from $65 at the start of 2013 and haven't been below $60 since January 2012.

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