Big Prints in Bearish Options on Financial Select Sector SPDR (XLF)

Macy’s, Inc. (NYSE:M) – A large bear put spread initiated on Macy’s today protects against, or profits from, a more than 3.0% adverse move in the price of the underlying through the department store operator’s first-quarter earnings report on May 15th. Shares in Macy’s are bucking the trend today, up 0.90% at $44.71 as of 12:20 p.m. ET, amid a down day for U.S. stocks. The stock earlier rose to $45.39, the highest level since 2007. It looks like one trader purchased a 6,400-lot May $41/$44 put spread at a net premium of $0.83 per contract. The trade makes money if shares in Macy’s decline 3.4% from the current level to trade below the breakeven price of $43.17, with maximum potential profits of $2.17 per contract available in the event that shares slide 8.3% to $41.00 by May expiration. In contrast, buyers of the May $46 and $48 strike calls on the retailer today are positioning for shares in the name to soar to fresh record highs in the near term. Traders paid an average premium of $0.87 each for around 800 of the $46 strike calls and roughly $0.33 per contract for 300 of the $48 calls.

Caitlin Duffy
Equity Options Analyst

The material presented in this commentary is provided for informational purposes only and is based upon information that is considered to be reliable. However, neither Interactive Brokers LLC nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither IB nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance is not necessarily indicative of future results.

This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities or other financial instruments mentioned in this material are not suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue. The information contained herein does not constitute advice on the tax consequences of making any particular investment decision. This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation to you of any particular securities, financial instruments or strategies. Before investing, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

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