XLF ? Financial Select Sector SPDR ETF ? Heavy volume in February expiry call options on the XLF this morning may be the work of one or more traders positioning for shares in the financials ETF to get back to highs last seen in February 2011.
The price of the underlying fund in the early going slipped 0.85% on Friday to a session and 11-week low of $15.06 before positive comments from Congressional leaders in Washington sparked a strong midday rally in equities. Shares in the XLF reversed earlier losses and now trades up 0.40% on the session at $15.24 as of 12:50 p.m. in New York.
Traders exchanged nearly 100,000 call options at the Feb. $17 strike by 12:45 p.m. ET versus previously existing open interest of just 4,391 contracts. It looks like the bulk of the volume was purchased at a premium of $0.10 per contract, setting call buyers up to profit at expiration should XLF shares rally 12% during the next few months to top the effective breakeven price of $17.10.
Upside call buyers are perhaps looking for financial stocks to move higher in the event that positive talk at the White House this afternoon translates into positive action from lawmakers in the months ahead.
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