Bears have been taking a bite out of industrial stocks recently after what has been a run of nearly a year of popularity for the sector.
OptionMONSTER’s Depth Charge tracking system detected the purchase of about 31,000 June 36 puts on the Industrial SPDR ETF (NYSE: XLI) for $1.47. A matching number of XLI June 32 Puts were sold at the same time for $0.48, resulting in a cost of $0.99. Volume was more than twice the open interest in both strikes.
XLI fell 0.71% to $36.50 in late morning trading, but is up 17% in the last six months. Of the major groups in the S&P 500, only energy stocks have done better over that period.
The fund peaked at $38.08 in February, its highest level since June 2008. Since then it’s been drifting lower, making a lower low and lower high this month. Some chart watchers may interpret that as evidence of an incipient downtrend.
Today’s trade, known as a bearish put spread, will earn a maximum profit of 300% if XLI closes at or below $32 by expiration.
Overall XLI options volume is triple the daily average so far today, with puts outnumbering calls by a bearish 90-to-1 ratio, according to Depth Charge.
(Chart courtesy of tradeMONSTER )
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