XRT Bearish Cross Could Burn Recent Call Buyers

XRT options traders have been gravitating toward calls over puts -- but not today

Feb 24, 2017 at 1:51 PM
facebook X logo linkedin


Options trading on the SPDR S&P Retail ETF (XRT) has picked up of late, as the shares have charged higher. At last check, the exchange-traded fund (ETF) was up 1.5% at $43.73, tracking higher with retail stocks -- including a post-earnings pop for shares of Gap Inc (NYSE:GPS). Below, we'll dig deeper into XRT's technical and sentiment backdrops to get a sense of where it might go next.

While puts are running at double the usual intraday rate today, the ETF's call options have been flying off the shelves in recent weeks, per data at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). XRT's 10-day call/put volume ratio of 1.98 ranks in the bullishly skewed 96th annual percentile, with long calls doubling puts. Moreover, call open interest is in the 91st percentile of its 12-month range, while put open interest is in the middling 50th percentile.

Perhaps these options traders are hoping for more earnings-induced tailwinds for the sector next week, when several big-name retailers hit the confessional. On the other hand, short interest has risen to 37 million XRT shares, suggesting at least some of the call buying -- especially at out-of-the-money strikes -- may be fueled by short sellers hedging.

Technically speaking, the SPDR S&P Retail ETF (XRT) has charted a series of higher lows since early 2016. But that doesn't mean the shares are in the clear. In fact, the retail ETF's 10- and 20-week moving averages just formed a bearish cross, hinting at potential headwinds:

xrt stock chart with bearish cross retail etf

Stay in the loop with stocks on the move. Sign up now for Schaeffer's Midday Market Check.
 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI