Finance-Sector ETF Trades Suggest Rally May Be Short Lived

July 27, 2012


Investors appear to have bought large blocks of put options on the Financial Select Sector SPDR Fund (NYSEArca: XLF) on Thursday, a bearish indicator suggesting some in the market are preparing for a significant downside move in bank stocks as the year unfolds, according to an article on Reuters.

One trader in particular purchased 70,000 puts at the October strike price of $13, a bet that means the traded would break even if XLF were to drop below $12.75, according to the article, which quoted options analyst Caitlin Duffy of Interactive Brokers Group.

Just the same, shares of the underlying ETF gained 1.5 percent, finishing the day at $14.49 a share, the article said.

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