Wednesday, December 2, 2009

Regional Banking ETF (KRE) - Betting on a Big Move

KRE is a regional banking ETF. You can see the Livevol Pro summary below.

The ETF averages about 5,800 contracts traded a day but has done over 12,000 in the first hour and half of trading today. Looking closely at the Company Tab (snap below - click to enlarge) you can see that the volume has been puts and calls on the offer (customer purchases).

You can see the largest trades of the day were 5,875 March 15/25 strangles (11,750 total contracts accounting for over 90% of the days volume with this one trade). Someone paid 0.70 5,875 times or a ~$410,000 bet. You can see the biggest trades below (click image to enlarge).

The Options Tab (below) shows that the puts have substantive OI relative to the trade size, but the calls do not. The calls are definitley opening - puts we are not sure (until we see tomorrow's OI). Having said that, I think it is an opening order.

So what does this mean? Someone is betting nearly half a mill that the regional banking etf goes below $14.30 or rises above $25.70 by March. That's down ~33% or up ~ 25%. That's a big move especially considering the 52 wk. price low is 14.34.

Legal Stuff:

No comments:

Post a Comment