Trade of the Week: Unusual Options Activity in Consumer Staples

11/15/2019 9:39 am EST

Focus: OPTIONS

Jay Soloff

Editor, Options Profit Engine

This week, the options trade of the week concerns the consumer staples sector. A trader took a large bearish position on the Consumers Staple Select Sector SPDR ETF (XLP). XLP covers the sort of goods consumers buy regardless of economic conditions like toothpaste and soda. It also includes the places where most people buy those goods like Walmart (WMT) and Costco (COST). 

The trader purchased over 14,000 puts at a strike slightly below the current price of the stock which expire at the end of the month. This could be a bet that the economy will avoid a recession and investors will rotate out of the consumer staples sector. Or, it may be someone who is buying into the position who expects negative economic news this month and is using the puts as a hedge against the downside.

Jay Soloff is the Options Portfolio Manager at Investors Alley. He is the editor for Options Profit Engine, an investment advisory bringing you professional options trading strategies, with all the bells and whistles of Wall Street, but simplified so all you have to do is enter the trades with your broker.

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