So much for a solid housing recovery.
According to June 11 Bloomberg trading data, 180,000 puts traded on the?SPDR S&P Homebuilders (XHB), hitting record heights.?In two trades valued around $2.7 million, 65,000 December puts with a $26 exercise price traded on the Philadelphia options exchange. ?
For the contract, it will pay off if there’s a 20 percent fall by December in a ETF that tracks stocks including DR Horton Inc. and Williams-Sonoma Inc.
The XHB is down 3.3 percent in 2014 as rising interest rates and a bumpy housing market recovery have affected its returns.?
Andrew Wilkinson, chief market analyst at Interactive Brokers LLC, said to Bloomberg, ?There are still a lot of reservations held about homebuilders. It may not be a surprise that by the end of the year, home-price gains may have run their course.?
In addition, with increasing housing market worries, in the last 13 of 15 weeks, investors have?withdrawn money from the fund, according to Bloomberg and last week alone, around $104 million was taken out–the greatest amount since March.
Fred Ruffy, senior options strategist at Trade Alert LLC, said to Bloomberg, “This could be a play on a weaker economy. It could be playing a rise in interest rates too, because housing is so sensitive to changes.?
On Tuesday, the ETF, rose 0.4 percent to $32.20.?