Puts Active on the UltraShort Crude Oil Fund (SCO)
Shares of the ProShares UltraShort DJ-UBS Crude Oil ETF (SCO) are trading higher on the session by 0.91%, at $40.02. The fund has been under pressure over the past six months as oil futures rallied throughout most of the past two quarters.
With the SCO potentially failing at the 200-day and 50-day moving averages, puts are active on the name today at 7.8x normal volume.
The majority of the action is coming in October, where the $38.00 strike was purchased 2,000 times, on the offer, for $0.60. With open interest of only 334 contracts, this is clearly new positioning.
That is not the whole story, though. Seconds after the block of puts were bought, 54,000 shares of SCO traded at $39.81 in what appears to be some type of ratio protective put position.
Given the delta and size of both trades, the trader is net long here (remember, that this voices the opinion of falling crude oil), with less than half of his exposure covered by long puts. This is a rather unorthodox trade.
The ProShares UltraShort DJ-UBS Crude Oil ETF seeks to provide daily investment results (before fees and expenses) that correspond to twice (200%) the inverse of the daily performance of the Dow Jones” UBS Crude Oil Sub-IndexSM.
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