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

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