bearish-300x200Derivatives markets took on a bearish tone yesterday.  The following is a summary of some of the more notable options trades on exchange traded funds (ETFs) – a derivative on a derivative:

EFA – is an ETF of the MSCI EAFE index fund, a pre-eminent benchmark to measure international developed country stock markets – notable put buying with August and September expiration.

EWZ – iShares Brazil ETF – August put buying

GDX – Gold miners ETF – August Call buying – bullish gold position could be a hedge on a bearish equity market

ITB – iShares Home Construction ETF – bearish August and September put buying.

IWM – iShares Russell 2000 Index, small cap equity ETF – August and September put buying

IYR – iShares Real Estate ETF – Consistent bearish flow with rolling of puts from July to September

SPY – S&P 500 ETF – August and January put spreads

TLT – iShares 20+ Year Treasury Bond ETF – bullish flow which could be a hedge on a bearish equity market.  U.S. Treasuries is a risk-off trade.

XLF – Financial SPDR ETF – January put buying

XLI – Industrial SPDR ETF – December put buying

For higher frequency traders, this bearish signal from the derivatives market may provide a reason for reducing equity exposure.  We are intermediate term traders and will remain long until our Market Sentiment Indicator turns bearish.

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