Investors appear to be protecting recent gains in the SPDR S&P Regional Banking Fund.
optionMONSTER's Depth Charge system shows that 10,000 April 40 puts were bought in two equal-sized prints for $0.53 yesterday. These are new positions, as open interest in the strike was a mere 167 contracts before the trades appeared.
Long puts lock in the price where the stock can be sold no matter how far it might drop, gaining value in a selloff. Although they can be used to make speculative bearish bets, yesterday's puts could well have been purchased to hedge long positions . (See our Education section)
The KRE slipped 0.19 percent to $41.27 yesterday but is up some 12 percent since the end of January. The exchange-traded fund is at the top of a range that has been in place since last April, reflecting the rise in many banks since the Federal Reserve's latest stress-test results last week.
Total option volume in the KRE topped 11,700 contracts yesterday, nearly triple its daily average for the last month. Only 850 calls changed hands in the session.
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