The iShares High-Yield Bond Fund saw a large trade yesterday that appears to be a protective hedge.
optionMONSTER systems show that 10,000 January 88 puts were sold for the bid price of $0.10 against previous open interest of 16,597. At the same time, 10,000 February 88 puts were purchased for $0.95 in volume above the open interest at that strike, so it is a new position.
Long puts increase in value when shares fall. Yesterday's trader is rolling the January puts forward by a month, as those contracts expire at the end of next week. This could be an outright bearish play, but it is far more likely a hedge to protect shares or another long position. (See our Education section)
The HYG rose 0.67 percent to $89.65 yesterday, closing in the middle of its recent range. The exchange-traded fund was down at a low of $86.12 in mid-December.
Total option volume in the fund topped 40,800 yesterday, double its daily average for the last month. Overall puts outpaced calls by more than 3 to 1.
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