Investor Activity In The SPDR ETF Suggests A Grave Outlook For 2010
“Investor activity in the popular SPDR S&P 500 (SPY) suggests a grave outlook for the market’s future. Heavy put volume indicates that traders aren’t expecting 2009’s bullish rampage to continue through 2010,” ETF.com Reports.
One of the most telling aspects of options activity are premiums, which demonstrate just how much traders are willing to bet on falling markets. Next year’s S&P500 put options are a third more expensive than the front month, indicating a dip in the general market, Bloomberg reports.
“The options markets do hold a predictive history. Put option activity peaked in the months running up to Lehman Brother’s collapse last summer, and the S&P 500 index dipped nearly 50% in the following months. However, not all options predictions are as accurate. Low priced put buying indicates that investors may expect greater volatility and not just straight line dips in stock prices. The chart below illustrates the performance of SPY over the past three years,” ETF.com Reports.
The investment (SPY) seeks to correspond generally to the price and yield performance, before fees and expenses, of the S&P 500 Index. SPDR Trust is an exchange-traded fund that holds all of the S&P 500 Index stocks. It is comprised of undivided ownership interests called SPDRs. The fund issues and redeems SPDRs only in multiples of 50,000 SPDRs in exchange for S&P 500 Index stocks and cash.
| TOP 10 HOLDINGS (SPY) ( 20.13% OF TOTAL ASSETS) |
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