In early April we looked at various components in the housing market and placed a defined risk bearish trade in the Homebuilder etf XHB. Since then the sector is down but has not experienced the break we were looking for with our slightly out of the money put spread. Here was the original trade:
*Trade: XHB ($33.70) Buy June 34/ 30 put spread for $1
- Buy to open 1 June 34 put for 1.25
- Sell 1 to open 1 June 30 put at .25
With XHB now 33 this put spread is right at our intrinsic break-even and with the market bounce this morning it risks becoming a loser if the broader market puts in a couple green days into tomorrow’s expiration. We’re going to close here and look for a better re-entry later:
ACTION – XHB (32.95) sold to close the June 34/30 put spread at 1.05 for a .05 profit
[caption id="attachment_64400" align="aligncenter" width="692"]
1 year XHB from LiveVol Pro[/caption]