# Options activity for XFN



## braintootired (Nov 4, 2013)

http://m-x.ca/nego_cotes_en.php?symbol=XFN*

A lot of open interest for ~25 strike puts. Everyone expect this to go down?


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## humble_pie (Jun 7, 2009)

braintootired said:


> http://m-x.ca/nego_cotes_en.php?symbol=XFN*
> 
> A lot of open interest for ~25 strike puts. Everyone expect this to go down?



that's not the way i would read that option chain at all.

there are a normal number of puts in open interest. The march contracts are the LEAPs in XFN, so there will always be large march open interest in the few ishare etf issues whose options trade heavily, such as XFN. XIU is the principal underlying etf in this category, of course.

the very few heavily-traded ishare etfs are the only canadian etfs with option trading that is liquid enough to attract institutional players.

large open interests in any option are never the simple read they appear to be. Because the onlooker doesn't know what twinned position was executed at the same time. Often, a large put trade means that the party was also buying stock long while hedging the position.

conversely, a large call trade often means that the party was shorting stock while buying calls as a hedge. New option traders often read large call buys as a bullish sign, but in reality they are not.

on the page you have linked, the only really interesting figure is the 20,000 march 29 puts that traded. That, i believe, is an institution crystallizing its tax losses in options call selling for the year. Meanwhile it is staying long the underlying stock. The institution needs that put as a hedge in case the underlying drops during the 30 days that will follow. I don't mean follow the date of the put buy, but rather follow the date of the call buy, whenever during the rest of 2013 they get around to doing that.

it's true that in this strategy, there is a certain amount of short-term market timing.


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## braintootired (Nov 4, 2013)

Wow, good to know. Thanks.


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