$XLF bears deposit gains

Bearish traders doubled their money today in downside option trades on the SPDR S&P Financial Fund (XLF).

On Sep. 10, Market Rebellion’s Unusual Activity tracking systems detected the purchase of 20,000 Weekly $24 puts, expiring next Friday, Sep. 30, for $0.35 as part of a bearish spread and roll with shares at $25.03. This was clearly a new position, as the volume was far above the strike’s open interest of 1,283 contracts.

Those puts have traded up to $0.66 today, about double their original purchase price. The stock fell 5.95% in the same time period, illustrating the kind of leverage that can be achieved through 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.

XLF was last down on the day at $23.55, lower by 1.59% while the yield on the benchmark U.S. 10-year Treasury note is lower by one-half of a basis point to 0.666%