It appears that traders, in the majority, are not expecting very positive results from next month’s sales and unemployment reports. Businessweek is reporting that, “The ratio of puts to sell the SPDR S&P Retail exchange- traded fund (NYSE: XRT) versus calls to buy it has jumped to 4.1-to-1, close to the highest level since August, and put trading surged to a nine-month high on April 23. Wagers are most concentrated on contracts that pay off should the ETF fall 18 percent by May 21.”
Businessweek is citing Kevin Nichols, vice president for ETF strategy at Newedge Group in New York, as saying that, “Retailers face contracting credit, high unemployment and no real visible spending catalyst on the horizon. The put-call ratio has doubled since the beginning of the year. That magnitude of increase usually marks a directional bet, more so than a hedge.”
Businessweek reports, “The Labor Department’s May 7 report may show the U.S. unemployment rate is still near the 26-year high of 10.1 percent reached in October, according to the median estimate of 13 economists in a Bloomberg survey. Consumer credit fell by $11.5 billion in February, 16 times more than forecast and the 12th contraction in 13 months, the Federal Reserve said April 7.”
The SPDR S&P Retail ETF (NYSE: XRT) seeks to replicate as closely as possible, before expenses, the total return performance of the S&P Retail Select Industry Index (ticker: SPSIRETR).
For the full Businessweek story click: HERE