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Bearish Long-Term Options Bets Seen In The XLF

Tuesday, February 21, 2017 11:16
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Analyst Paul Weisbruch of Street One Financial brings us his daily fund flows update, which today includes continued inflows in a popular financial ETF (along with contradictory bearish options bets there), more inflows into major equities funds, and outflows in some long oil plays.

We spent some time over the past couple weeks talking about DIA (SPDR DJIA) inflows, and there was some late week profit taking in the ETF, with more than $2 billion exiting the fund on more new all-time highs in the product and the underlying index. Year-to-date however, the fund has still maintained net inflows ($527 million in).

On the other hand, SPY attracted considerable inflows (over $4.3 billion in) heading into the President’s Day weekend, as did the most popular financial-focused ETF, XLF (SPDR Financial, more than $1.4 billion in). We did see some distant put buying in XLF on Friday, however consisting of activity in the September 23 strike puts. With XLF trading around $24.50 today, those options imply more than 6% downside — although with nine months to go, there’s plenty of time for a significant pullback there.

Elsewhere, in the Emerging Markets space, IEMG (iShares Core MSCI Emerging Markets) pulled in $1.2 billion via creation flows which is a substantial amount for this particular name. Finally, there was some clear position trimming occurring last week in two long “Crude Oil” ETPs, USO (U.S. Oil) and the levered UCO (ProShares Ultra Bloomberg Crude Oil) with the two funds seeing more than $80 million flow out apiece.

The Financial Select Sector SPDR Fund (NYSE:XLF) was trading at $24.56 per share on Tuesday morning, up $0.09 (+0.37%). Year-to-date, XLF has gained 5.63%, versus a 5.60% rise in the benchmark S&P 500 index during the same period.

XLF currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 38 ETFs in the Financial Equities ETFs category.

About the Author: Paul Weisbruch

paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.

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