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A Tale of Two ETF's

|Includes: CSCO, VMED, Financial Select Sector SPDR ETF (XLF), XLK

Two of today’s largest option trades come not surprisingly in ETFs; the Spyder Select Financial (NYSEARCA:XLF) and Spyder Select Technology (NYSEARCA:XLK) and are, even less surprising, are of a bearish nature even the two sectors hit fresh one month lows after breaking below their 50-day moving averages yesterday. In the XLF the most notable trade involved a three legged combo in which 80,000 of the September $15 calls were sold to help finance the purchase of 85,000 of the September $14/$13 put spread for 12c net debit.

Interesting to note that the weekly options which are available have barely registered any volume today despite the sharp decline an pick up in implied volatility. The most active weekly is the $14 put which has traded a mere 200 contracts. As someone once noted, the opposite of love is not hate but rather apathy. And this seems to suggest the continued decline of investor involvement in the market which can only be taken as a bearish sign.

In the XLK, which is being hurt by the 9% sell-off in Cisco (NASDAQ:CSCO), the option flow is still bearish but more moderately so with the largest trade consisting of what appears to be roll out of the August $22 puts to a fresh purchase of the September $21 puts some 16,000x in an attempt to extend the time frame of downside protection while taking some money off the table. Again, the action in the weekly options of this ETF is minimal and seems mostly to consist of liquidating positions.

VMED Virgin Media option volume running 8x the average daily volume with notable volume in the August $22.50 calls trading 7,000 contracts at the 5c ask along with opening the September $20 calls and puts which have traded 10,000 and 7,000 contracts respectively. Looks like a fresh Aug/Sep.20/$22.50 bullish r/r while closing the September call position.

Disclosure: None