BUY, SELL, HOLD (2)

Breaking Down the Big Bearish Options Spread on Retail

Retail stocks slumped this week as earnings disappointed

May 24, 2019 at 2:58 PM
facebook X logo linkedin


It's been a rough month for retail stocks, with dismal earnings reports from several high-profile names, including Lowe's (LOW) and Foot Locker (FL), driving the SPDR S&P Retail ETF (XRT) toward its third straight weekly close, down 2.3% since last Friday. One options trader today is positioning for more downside in the sector, and likely rolled their bearish bet down and out.

By the numbers, more than 48,000 XRT puts have changed hands today -- almost six times what's typically seen at this point, and 43 times the number of calls traded. According to Trade-Alert, the bulk of the volume occurred when one speculator closed out their June 40-44 put spreads, then bought to open the July 38-41 put spreads. If this is the case, the speculator expects XRT -- which was last seen trading at $41.66-- to fall all the way to $38 by July options expiration.

This bearish positioning is just more of the same for XRT options traders. Over the past 20 days, traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 3.30 puts for each calls.

Echoing this put-heavy backdrop is the exchange-traded fund's (ETF) gamma-weighted Schaeffer's put/call open interest ratio (SOIR) of 4.95. This shows that near-the-money puts comfortably outweigh near-the-money calls among options expiring in three months or less.

 xrt retail etf daily price chart on may 24

 

Two High-Octane Trade Ideas. One Simple Goal: Intraday Profits.

Dynamite Day Trading Signals delivers two same-day options trades every week — powered by proprietary intraday analysis and 43+ years of trading expertise.

But this isn’t just another stream of alerts.

It’s a structured plan with clear entry and exit points – designed for traders who want to act fast, trade smart, and wrap up gains before the closing bell.

No guesswork. No overnight exposure – Just two well-researched setups per week — whether you prefer buying premium or selling it.

And the results speak for themselves: subscribers have locked in +245.8% total profit over the last six months (since inception!).

👉 Start your one-month trial now for just $10, and be ready for the next trade alert.