Reuters reports that, “The SPDR S&P Retail exchange-traded fund appeared to have attracted a large 25,000 lot put butterfly combination, indicating near-term weakness for retailing share prices, said Andrew Wilkinson, market analyst at Interactive Brokers Group. The ETF fell 1.73 percent to $26.19 in afternoon trade after earlier standing at $26.34. The investor sold some 50,000 put options in the July contract expiring in 10 days time at the $24 strike. At the same time, the player bought two baskets of 25,000 puts at the surrounding $22 and $26 strike prices. The overall premium comes to a net 35 cent cost to the investor who would make $1.65 in the event that at expiration the share price of the ETF was precisely $24 (the central strike price of the trade), he said in a note. Wilkinson noted the fund must fall in value to $25.65 before the investor would breakeven. ”

SPDR S&P Retail (XRT) seeks to replicate as closely as possible, before expenses, the performance of an index derived from the oil and retail segment of a U.S. total market composite index. The fund uses a passive management strategy to track the total return performance of the S&P Retail Select Industry index. The index represents the retail sub-industry of the S&P Total Market index. As of September 30, 2007, the Retail index was comprised of 60 stocks. It is an equal weighted market cap index. The fund is nondiversified. 

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XRT