Consumer Staples Select Sector SPDR Fund (XLP) is an ETF that seeks to provide returns in line with a consumer staples sector index. XLP is currently trading around $49.21 in a 52 week range of $39.83-$49.63. The fund has been outperforming the broader market this year with shares rallying more than 14.5% year to date. Despite this strong performance some traders are establishing some very bearish positions in today’s session.

Earlier this morning a trader bought 9,968 XLP Feb 48 Puts for $0.54. This is a very large order that has this trader risking nearly $540,000 through Feb expiration. Although XLP looks very strong on a chart this order is very large and likely represents this trader’s belief that XLP has become overbought. This trade has a good risk vs. reward setup so I elected to buy some of these puts.

Trade: I bought 200 of the XLP Feb 48 puts for $0.55
Risk: $55 per 1 lot
Breakeven: $47.45

Andrew Keene


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