Here is some apparently untied directional options activity that caught my eye in today’s trading:
XRT: the S&P retail etf is down about 10% from its August highs, one of the worst performing S&P sectors over the last 3 months. When the etf was trading $41.60 in the afternoon there appeared to be a bearish roll with a trader selling to close 7500 of the Nov 43 puts at $1.55 and buying to open 7500 Nov 41.50 puts for 72 cents.
The 5 year chart of the XRT looks like a slow moving trainwreck, looking a whole heck of a lot like a textbook head and shoulders top, once again approaching long term support, the neckline at $40:
We have been bearishly positioned in the XRT since late Sept (What’s In Store for Box Stores? – XRT), and might consider rolling this view down and out on a break below $40.
HYG: the high yield bond etf has been down in sympathy over the last week or so with the sharp decline in crude oil over the last couple weeks ($51.93 on Oct 19th to $45,.50 today). It appeared that traders today might have been taking off hedges in the HYG as put volume was 2x average, and 5x that of calls. Much of the activity looked to be closing sales with the largest block trade of the day a closing sale of 11,500 Nov 85 puts at 86 cents when the etf was $85. There was an opening bearish trade out in June expiration when the etf was trading $85, 5,000 of the June 75/70 put spreads were bought for 60 cents. This spread breaks-even at $74.40, down 12.5% from the trading levels, interestingly below the 52 week low made in Feb when Crude was $25/ The etf just broke the uptrend that had been in place from the lows, and below 1 year support at $85:
XOP: The S&P Oil & Gas etf had held support above $35 for the last 3 months until this morning, after a few consecutive closes below the uptrend that had been in place since the January 2016 lows:
At least one trader looks to be playing for a defined risk bounce back towards the recent highs just above $39. When the etf was $34.35 a trader bought to open 11,000 of the Dec 9th weekly 36 / 39 call spreads for 75 cents.