By Mike Yamamoto
The Consumer Discretionary SPDR exchange-traded fund has climbed to a new 52-week high, but today's option action it looking for a top.
The XLY trades at $30.82, just off the high of the morning which is the highest level the fund has seen since September of 2008. The price has doubled from the March low.
Our systems show that 5,000 of the April 31 calls were sold, making up almost off of this morning's volume in the XLY options. The trade went off in two blocks, the first of 2,500 were sold for $0.55 and seconds later, another 2,500 were sold for $0.50. This volume was against open interest of 100 contracts, so it was clearly new opening positions.
This activity indicates that this trader believes that shares will not climb much above current levels. These calls were likely sold against stock, as there was a spike in volume in the XLY shares a couple of minutes after the options trade.
It appears that the options were sold in a delta-neutral strategy against shares, meaning that the trader is less concerned with market direction but believes that volatility will subside.
(Chart courtesy of tradeMONSTER)