Large trades appeared to be protecting gains in the SPDR Consumer Discretionary Select Sector Fund yesterday.
optionMONSTER's Depth Charge system detected the purchase of 59,287 June 73 puts for the ask price of $1.39 and 12,500 May 74 puts for $0.97. Both trades were bought in one print each for their respective ask prices at the time and were above previous open interest, showing that they are new positions.
Long puts lock in the price where the stock can be sold no matter how far it might drop, gaining value in a selloff. The contracts can be used to make an outright bearish bet, but yesterday's puts were likely bought to hedge long positions in the fund or its components with shares near all-time highs. (See our Education section)
The XLY fell 0.44 percent to $75.35 yesterday. The stock pulled back after reaching a lifetime high of $77.13 at the beginning of last week but then rebounded at the same level near $74 where shares bounced sharply in early March. The exchange-traded fund's top holdings include Walt Disney, Comcast, Home Depot, and Amazon.com.
Overal option volume in the XLY topped 77,000 yesterday, more than 6 times its daily average for the last month. Total puts outnumbered calls by 40 to 1.
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