S&P 500 Analysis & ETF Trading

[circlem]

XLF - There is no way to know if the these puts are being bought or sold. You can try and make a guess by tracking open interest, but that won't tell you everything. It could be that some big traders are selling a bunch of put contracts to collect some premium. Of course they would have to believe that XLF will close above the strike price of the sold options on expiration. They could also be selling puts as part of a stock accumulation strategy. In other words, they would have no problem being put stock at the strike price on a pullback. They get the added advantage of taking in some premium for selling the puts which reduces the cost basis of taking the stock. It could also be the some big traders want to buy some insurance to protect a position they do not want to stop out on as they are long term bullish but maybe short term a bit nervous. My guess in this case is these puts were bought for insurance as the premium is so low they aren't worth selling. Here is a link to an article that explains option open interest volume. Hope that helps. Option trading is bit more complicated than buying and selling stocks.

http://www.investopedia.com/articles/optioninvestor/04/060904.asp