S&P 500 ETF Draws Big Bearish Play As Losses Eyed (SPY, SDS, FAZ, FAS, DOG)

black-bear“As U.S. stocks enjoy a big summertime rally, one option investor went on the defensive on fears the Standard & Poor’s 500 .SPX benchmark could suffer significant losses between now and December. Put option volume swelled to about 1.53 million contracts in the SPDR S&P 500 (SPY.P) on Thursday after an institutional player extended a large bearish position in the exchange-traded fund that tracks the performance of the S&P 500 index. The massive trades involved 720,000 put option contracts, granting investors the right to sell the underlying shares of the ETF at a fixed price within a specified time period,” Doris Frankel From REUTERS Reports.

“They were executed on the International Securities Exchange, the largest U.S. equity options market, said Henry Schwartz, president at option analytics firm Trade Alert.  The fund, often called the “Spiders,” is a crowd favorite among option traders and is designed to equal roughly one-tenth the actual S&P index,” Frankel Reports.

“This trade is bearish and has a large area under which it would remain profitable to the downside,” said Joe Kinahan, chief derivatives strategist at online brokerage thinkorswim Group. “This institutional investor is definitely looking for a pullback in the S&P 500 between now and December expiration.”

Full Story: HERE

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