Investors Are Starting To Hedge Their Bets On Financials

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December 6, 2016 12:45pm NYSE:SPY NYSE:XLF

money flow

Analyst Paul Weisbruch in his daily fund flows update notes some unusual options activity surrounding a popular financial ETF, along with some very bullish bets taking place in the wider markets.

The Financial Select Sector SPDR Fund (XLF) has run away like a freight train since Trump’s election, but we did see some cheap protection buyers yesterday, utilizing the January 20 puts in the product. XLF has traded as high as $23.07 this morning before regressing a bit and we have mentioned the presence of call buyers and inflows in the product on several occasions in this recap recently.

The XLF was up once again Tuesday afternoon, trading at $23.06, up $0.14 (+0.61%).

In other action, a new upside strike in the SPDR S&P 500 ETF Trust (SPY) options traded yesterday: the January 230 calls. This is a reflection of where markets currently are, after the post-Trump election rally, and where market expectations into 2017 may perhaps be.

This morning, SPY is trading with a $221 handle (up 0.17%), and this trade may be speculation on a “Santa Claus” rally in equities that may follow through into January of next year. Market technician David Chojnacki notes upside resistance in the SPX at 2212 and 2213, and we’ve seen trades as high as 2214.10 briefly five sessions ago. Thus, traders and investors can expect some potential trouble crossing that level in the near term.

Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch
paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.

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