Today’s tickers: XRT, JEF, OII & TRGT
XRT – SPDR S&P Retail ETF – Massive prints in XRT put options launched the ETF near the top of our ‘most active by options volume’ market scanner today. The put butterfly spread initiated on the SPDR S&P Retail ETF in the first half of the session yields maximum benefits to its owner in the event that the price of the underlying fund slide more than 8.0% in the next few weeks. Shares in the XRT currently trade 1.9% lower on the session at $51.56 as of 1:10 pm in New York. The bearish transaction on the retail-sector fund involved the purchase of 35,765 puts at the Nov. $51 strike, the sale of 71,530 puts at the Nov. $47 strike, and the purchase of 35,765 puts at the Nov. $43 strike, all for a net premium of $0.53 per contract. The investor responsible for the transaction greatly reduced the cost of positioning for limited bearish movement in the price of XRT shares through expiration. For example, investors looking to buy puts outright at the Nov. $51 strike must currently shell out $1.79 per contract. The put ‘fly spread prepares the trader to profit should shares in the XRT decline 2.1% to breach the upper breakeven price of $50.47. Maximum potential profits of $3.47 per contract are available to the strategist if the price of the underlying fund falls 8.8% to settle at $47.00 at expiration day in a few weeks. The investor risks losing a maximum of $0.53 per contract, or the amount of premium paid to initiate the position, buts stands ready to gain more than six times that amount if the fund slips to $47.00 at expiration. Shares in the XRT opened the October 5, 2011, trading session at $47.00.
JEF – Jefferies Group, Inc. – Bearish options trades on global securities and investment banking firm, Jefferies Group on Monday seem to have paid off handsomely for at least one investor on Tuesday. Shares in JEF dropped 8.8% to $12.09 by midday on the East Coast. It looks like one trader snapped up around 1,000 puts at the Nov. $12 strike yesterday for an average premium of $0.25 apiece. Today, it appears 1,000 of the put options sold for $1.00 each, six minutes into the trading day. If it’s the case that the buyer of the contracts and the seller are one and the same,…
