$XLC bears score a quick win

$XLC bears score a quick win

by

Bearish traders are making quick gains today on downside option positions opened yesterday in the SPDR Communication Fund (XLC).

On Jan. 30Market Rebellion’s Unusual Activity Service found that 7,500 Weekly $77.50 puts were bought for $0.65 to $0.75 above the existing open interest of 1,144 contracts with shares at $78.33.

Those puts have traded for as much as $1.65 this session, a 120% return, while the stock fell 2.74% in the same time frame, illustrating the kind of leverage that can be achieved quickly with options.

Long puts lock in the price where a stock can be sold no matter how far it might drop, gaining value in a selloff with the potential for significant leverage. The contracts can be purchased either as an outright bearish bet or a hedge on a long-stock position.

XLC was last lower by 1.66% on the day to $76.51.

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