Heavy Options Betting Against Christmas Retail (XRT, CHS, GPS, GYMB, JCP, RSH)

Posted in Options 
August 11th, 2009

SPDR S&P Retail (XRT) is seeing a large bearish bet on Christmas shopping with a 15,000 contract December $31/$27 put spread for $1.45 financed via the sale of 15,000 December $34 calls at 41.45, a costless trade bearing a lot of risk and showing conviction that retail is sue for a set back.  Large holdings include CHS, GPS, GYMB, JCP, RSH, and EXPE.    Many feel the recent bullish statements out of retailers are due to cost cuts, inventory liquidating, and promotional sales and not a true sign as traffic and same store sales continue to shrink.  With the XRT back at last year’s levels it does not feel like the price can be justified based on sales data and consumer spending continuing to cut back.

-JOE KUNKLE, OptionsHawk.com

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