Put Options Trade On Social Media ETF
by Option Review - July 8th, 2014 3:28 pm
It’s an ugly day for many of the top holdings of the Global X Social Media ETF (Ticker: SOCL), dragging shares in the fund down 3.75% in afternoon trading to $18.70. Activity in August expiry put options on the SOCL this morning suggests one trader is bracing for further weakness in the ETF through expiration.
The largest trade in SOCL options today was the purchase of a block of 4,000 now in-the-money Aug 19.0 strike puts for a premium of $0.80 per contract. The trade hit the tape within the first 15 minutes of the opening bell, and premium on the 19.0 puts has since inched higher as the price of the underlying shares slipped lower intraday. At last check, premium required to buy the Aug 19.0 strike puts is $1.10 per contract, or 37.5% higher than the $0.80 paid this morning for the bearish contracts.
The put position may be profitable at expiration next month if SOCL shares drop another 2.6% from the current price of $18.70 to breach the breakeven point at $18.20. Shares in the Social Media ETF last traded below $18.20 on June 9th.
Social Media: Maybe It’s Different This Time…
by Option Review - March 6th, 2014 3:20 pm
The Global X Social Media Index ETF (Ticker: SOCL) touched fresh record highs on Thursday morning, surprising no one given the top three holdings of the Fund are Hong Kong-based Tencent Holdings (12.678%), Facebook Inc. (12.506%) and LinkedIn Corp. (8.166%), which are up 130%, 160% and 22%, respectively, since this time last year. The SOCL reflects the performance of companies involved in the social media industry, including companies that provide social networking, file sharing and other web-based media applications. Shares in the ETF rose 1.3% today to a new high of $23.00, and have soared approximately 65% since this time last year.
Broader benchmarks for the U.S. stock market have been hitting fresh highs recently, helped in part by the outperformance of social media related stocks. Options activity on the SOCL today suggests at least one trader is picking up some downside protection on the sector in the event the rally in equities hits a speed bump during the next few months.
The ETF popped up on our ‘hot by options volume’ market scanner this morning after a sizable block of out of the money put options changed hands. It looks like one strategist purchased 2,000 of the Jun $20 strike put options for a premium of $0.40 each, and suggests the trader is bracing for shares in the SOCL to potentially tumble roughly 13% during the next few months. The put buyer could be using these contracts as a relatively inexpensive way to hedge positions in the underlying holdings of the fund, or to protect a long position in the fund itself. For example, buying put options on Facebook that protect against a 13% dip in shares of that company would cost roughly $3.30 each (for the Jun $62.5 strike put options) while puts on LinkedIn looking for a 13% dip in those shares by May expiration (June series not currently available) tout an asking premium of $7.15 each as of 12:25 p.m. EST.
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Technical Tuesday – 50 DMAs Will Grade Us Pass or FAIL!
by phil - June 19th, 2012 8:28 am
BIG day today!
As you can see from the Big Chart, we are testing the 50 day moving averages on the Dow (12,746), S&P (1,347), Nasdaq (2,920), NYSE (7,756) and the Russell (781) IF all goes well and we move up from here. The Dow is already over and the S&P and Russell are close so we'll be watching them closely this morning to see if we should stay bullish or cash out our winners while we wait for some actual bullish news – because the rumors that are driving us higher so far are running out of steam.
The G20 meeting drags on in day 2 and we await their announcement. China dropped $43Bn into the IMF last night and India, Russia, Brazil and Mexico will also commit $10Bn EACH for another $40Bn and that brings the IMF's war chest up to $456Bn. Even Turkey put up $5Bn – we're talking about an all-out Global effort here so we expect A LOT more from the big guns.
Let's not dwell on what it means that Turkey has to bail out Europe and instead focus on Christine Lagarde's statement that the commitments demonstrate "the broad commitment of the membership to ensure the IMF has access to adequate resources to carry out its mandate in the interests of global financial stability." So now it's up to the G20 and that means it's up to Merkel today and Bernanke tomorrow.
Merkel faces mounting pressure to make even greater concessions, by putting Germany's financial muscle behind an integrated banking and borrowing system to keep the euro intact. The question is whether, after two years of muddling through, Europe's pre- eminent power can act quickly and decisively. "I think she will remain an incrementalist: we have not yet reached the point where it is obvious that we are hanging over the precipice," said Paul de Grauwe, a professor at the London School of Economics. "It looks again that what is going to come out is going to temporarily pacify markets until it is clear that it is not going to be sufficient."
For those of you who don't speak Economics – "not going to be sufficient" = DOOM!!!
All of our global indexes are on quite a tear in anticipation of more bailouts/QE from the G20 this week. If we don't get it – prepare for…