XHB Dec Call Option Up 30 Percent In Eleven Days, RSI Alert

The $XHB DEC 16 Call was active again today with over 30,000 contracts traded. If you remember my post on July 27 I wrote that 42,000 calls traded at the DEC $16 strike. To be exact 39,864 XHB Dec 16 Calls traded at 0.575. OptionMonster mentioned that it could have been a "ratio trade".

On August 3, 30,000 contracts hit the bid at 0.75 with 85,243 open (ht crimson mind). If a hedge fund bought 30,000 contracts at 0.575 and flipped it at 0.75 eleven days later that is a 30% profit, or $525,000. This is assuming the trade was solely speculative based on the price and volume. It could have been new money or part of a spread.

$XXJLP, XHB DEC 16 Call (Courtesy of OptionsXpress)

Since that July 27 post, XHB broke above $14 and rallied 7.9% to $14.63 (from $13.56). XHB has been very strong lately. The Relative Strength Index is at 81.26. According to Stockcharts.com chart school, a level above 70 is considered overbought and is a sell signal if there is negative divergence between RSI and price. I also added on the StochRSI oscillator. The Government is making moves on the housing industry in September.

RPT-UPDATE 1-U.S. plans third redo of key housing aid effort (Reuters)

XHB Stock and RSI (Courtesy of Stockcharts.com)


  1. Open interest increased about 10,000 contracts to 95,807, 8,000 dropped today so far. Wow! $XHB


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