What's Behind This Huge SPDR S&P 500 ETF Trust (SPY) Trade?

It appears one SPDR S&P 500 ETF Trust (SPY) trader rolled down a massive put position in the quarterly 3/31 series

Karee Venema

Mar 27, 2015 at 10:21 AM

Put players were active on the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) yesterday, with the contracts trading at 1.4 times the average daily rate, and outpacing calls by a 2-to-1 margin. Drilling down, our Senior VP of Research Todd Salamone noticed some interesting action at the quarterly 3/31 200- and 205-strike puts, where two symmetrical blocks of 40,000 contracts changed hands.

Drilling down, it appears as though the lower-strike puts were purchased, while the higher-strike puts were sold. Assuming this was a roll, the trader expects SPY to settle south of $200 at next Tuesday's close, when the quarterly series expires.

Salamone offered even more insight, explaining that a similarly sized block of 40,000 quarterly 3/31 205-strike puts was purchased on Feb. 17 for $2.52 apiece, and was sold yesterday for $1.71 each -- meaning the speculator may have incurred a loss. Meanwhile, he also noted that the sale of the near-the-money 205 puts appeared to have a coincident positive impact for the SPDR S&P 500 ETF Trust (NYSEARCA:SPY), as it occurred simultaneously with the fund's morning lows. This morning, SPY was last seen fractionally lower at $205.26.

Follow @Schaeffers

Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released!