Puts on the SPDR 500 Trust (SPY) are heavily traded, as concerns about slowing in China’s economy and worries about the Eurozone debt crisis have conspired to send stock market averages sharply lower to start the trading week. Stock index futures were sent skidding ovenight after a Chinese central banker warned that economic growth might have slowed to 7.4 percent in the current quarter. China’s economy grew 7.6 percent last quarter, the least amount in three years. Meanwhile, doubts are rising about Greece’s ability to meet commitments to secure bailout funds, while Spanish bond yields tick up to new records of 7.45 percent. 350,000 puts and 150,000 calls traded on the SPY in the first half hour of trading. The SPYders are off $2.47 to $134 and morning trades include a 30,000-lot of Weekly 133 puts at 72 cents when the market was 72 to 74 cents. It traded electronically on the CBOE and looks opening (no indication on direction). More than 44,000 now traded against 17,791 in open interest. Aug 130, 128, 134, 125, and 135 puts are the next five most actively traded SPY contracts.
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Frederic Ruffy is a well-known trader, writer, and strategist who has spent years educating investors and creating intelligent, insightful, unbiased market observations that are frequently cited by the Wall Street Journal and other financial publications. As senior analyst, Fred provides frequent and regular notes and daily updates for activity of interest.