Protection Purchased on the Healthcare Select SPDR (XLV)

Shares of the Healthcare Select SPDR (XLV) are trading higher on the session by 1.00%, at $40.71. The fund has been trending higher over the past five months, notably testing on holding the 20-day moving average Friday. 

Despite shares rallying off of a critical support level, puts are active today. A short while ago, the December $38.00 put was purchased 6,229 times, on the offer, for $0.31. Given current open interest of 2,564 contracts, this is clearly fresh positioning.    

This trade is notable given the fact that puts have begun to gain steam over the past two weeks with traders either buying naked puts, shorting stock and shorting puts, and/or buying put spreads.  

UPDATE: Shortly after this was posted, 20,000 January 2014 $50 calls were purchased, on the offer, for $0.12. Volume exceeded open interest. Obviously, this voices strong opposition the above put trades mentioned. 

30-day implied volatility is off slightly today, down 1.0% to 13.82%, with historical volatility remaining in line at 10.16%.

The Healthcare Select SPDR seeks to provide investment results that before expenses correspond generally to the price and yield performance of publicly traded equity securities of companies in The Health Care Select Sector Index. 

About Michael Zerinskas

Originally from Chicago, Michael J. Zerinskas began his career as an intern for a small high-frequency trading firm based at the CME; he then moved on to become Chief Options Strategist at Benzinga.com. Michael is now Unusual Activity Editor at The Options Insider, specializing in VIX, volatility, and flagging unusual activity.