Callie Bost Writes:
Traders are accumulating options to protect against losses in an exchange-traded fund that tracks housing stocks, speculating the homebuilding recovery may be threatened by an increase in interest rates.
The cost of puts conveying the right to sell the SPDR S&P 500 Homebuilders (XHB) exchange-traded fund reached the highest level in 14 months relative to bullish contracts, according to three-month data compiled by Bloomberg.
Investors are growing concerned that the housing recovery may be derailed when the Federal Reserve increases its benchmark rate following a six-year stretch near zero percent, according to Ryan Detrick at See It Market. Shares of the ETF have tumbled 9.1 percent this year after almost doubling in 2012 and 2013.
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