“Metal stocks have taking a beating in the last two weeks, and now one trader is looking for more downside using the SPDR S&P Metals & Mining exchange-traded fund (NYSE: XME). optionMONSTER’s Depth Charge tracking system yesterday detected the purchase of 10,000 May 52 puts for $1.86 and the sale of an equal number of May 49 puts for $0.86. This put spread resulted in a net cost of $1,” Options Monster Reports.

They go on to say, “At the same time, a similar existing position was unwound in the May 56 and May 53 puts, resulting in a credit of $1.81. Rolling the strategy down to a lower strike price allowed the trader to recover $0.81 of premium, while giving exposure to a deeper decline. They now stand to earn 200 percent on the $1 they have at risk if (XME) closes at or below $49 on expiration.”

“The fund dropped 4.42 percent to $52.95 and is down 15 percent since mid-April. The sector has been losing momentum following a weak earnings report from Alcoa, concerns about European sovereign debt, and Australia’s move to impose a new tax on resource “super profits.” XME had climbed 26 percent between the between the beginning of February and the beginning of April as investors priced in strong economic growth globally. The trades pushed overall options volume in the fund to nine times greater than average, with puts accounting for 91 percent of the activity,” Options Monster Reports.

Here are some details on the SPDR S&P Metals & Mining ETF (NYSE: XME) including a list of the holdings within the ETF.

SPDR S&P Metals and Mining ETF (NYSE: XME)

The SPDR® S&P® Metals and Mining ETF seeks to replicate as closely as possible, before expenses, the total return performance of the S&P Metals and Mining Select Industry® Index (ticker:SPSIMMTR).  Our approach is designed to produce portfolios with low portfolio turnover, accurate tracking, and lower costs.

XME