Bearish Options Trade Bets Utilities SPDR (XLU) Rally Running On Empty

Utilities SPDR (NYSEARCA:XLU) – A large trade in Utilities SPDR (NYSEARCA:XLU) puts yesterday suggests at least one options market participant is preparing for the strong run in the price of the underlying to run out of juice in the near future. Shares in the Utilities Select Sector SPDR ETF are up 0.20% today at $41.00, on the heels of a 17% move to the upside since the end of 2012. The biggest print in Utilities SPDR (NYSEARCA:XLU) options yesterday was the purchase of a block of 50,000 Jun $40 strike puts at a premium of $0.51 each. The bearish strategy starts making money if the price of the underlying slips 1.2% from the current price of $41.00 to breach the breakeven point on the downside at $40.49.

Hewlett-Packard Company (NYSE:HPQ) – Weekly calls changing hands on Hewlett-Packard Company (NYSE:HPQ) today look for shares in the name to rally in the near term. The stock is up 3.0% this afternoon to stand at $20.24 as of 12:25 p.m. ET. Shares in Hewlett-Packard Company (NYSE:HPQ) had been on a tear, rallying more than 60% during the first three months of 2013 to a six-month high of $24.05 on April 1st. Since then, however, the computer hardware maker’s shares have declined roughly 15% to reach the current level. Options traders positioning for shares to move higher next week appear to be buying the May 03 ’13 $20 and $21 strike calls this morning. It looks like traders snapped up 2,600 of the $20 strike calls at an average premium of $0.33 each and around 3,200 of the $21 strike calls for an average premium of $0.16 apiece. Call buyers stand ready to profit at expiration next week in the event that shares in Hewlett-Packard Company (NYSE:HPQ) exceed average breakeven points at $20.33 and $21.16, respectively. Hewlett-Packard Company (NYSE:HPQ) reports second-quarter earnings after the close on May 21st.