STOCKS NEWS US-XLF ETF put spread is adjusted as likely hedge

Fri Oct 4, 2013 2:10pm EDT
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Real-time equity news [E U] U.S. stock market report 1359 ET 04Oct2013 Financial XLF ETF spread trader appears to adjust put hedge --------------------------------------------------------------------------------

Shares of the Financial Select Sector SPDR exchange-traded fund rose 14 cents to $20.01 on Friday afternoon. On the options front, 141,000 puts and 32,000 calls traded on the exchange-traded fund thus far -- a ratio of 4.42 to one, according to Trade Alert.

The top trades are part of a spread, in which the investor sold 34,000 October $18 strike puts on XLF and bought 40,000 November $18 strike puts, according to a source on an exchange floor, Joe Cusick, senior market analyst at optionsXpress, said in a report on Friday. The October $18 puts, which are out of the money, expire in two weeks. Cusick surmised that the spread is possibly a roll, with the investor liquidating a big block of October XLF puts to open a new block of November puts at the same strike price. The XLF holds all of the financial-related names from the S&P 500. "An investor is possibly rolling the puts on the ETF today to adjust a hedging strategy against a portfolio of financial-related names," he said.

Reuters Messaging: 1015 ET 04Oct2013-Total option open interest increases by 5.89 mln contracts --------------------------------------------------------------------------------

A total of 18.1 million contracts changed hands in the U.S.-listed options market on Thursday, resulting in net open interest growth of 2.87 million calls and 3.02 million puts, according to Trade Alert.

Micron Technology Inc, United Parcel Service Inc, JPMorgan Chase and Co and Facebook Inc attracted the greatest increase in option open positions, data from Trade Alert showed.

The top five new positions opened include 53,000 UPS January 2015 $110 strike calls; 50,000 UPS January 2015 $120 calls; 34,000 Tesoro Corp February 2014 $60 strike calls; 20,000 United States Steel Corp January 2014 $22 strike puts; and 19,000 BlackBerry Ltd weekly $8 strike puts expiring Oct. 11, Trade Alert said.

Reuters Messaging: 0717 ET 04Oct2013-Economic and earnings diary for Oct. 4 ----------------------------------------------------------------------------- Economic data expected on Friday includes the weekly index of economic activity from the Economic Cycle Research Institute. The previously scheduled employment report for September is postponed due to the government shutdown.

No S&P 500 companies were scheduled to report earnings on Friday.