HOT TRADING STRATEGIES FOR A COLD MARKET
Daily Stock Market Equity and Options Trading Commentary

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Wednesday, February 4, 2009

Short Term Rally Might be on the Way for Financials

As posted previously their was a massive amount of SPY PUTS being traded, and after that the market slid significantly. Today however there was an unusual amount of Call activity for Financials. 3 of the top 4 contracts traded today were for XLF Calls: 1: XLF June 9 Call, 2: XLF June 6 Put, 3: XLF June 11 Call, 4: XLF February 10 Call, also the 6th and 7th most contracts traded were: 6: WFC February 5 Call, and 7: C February 5 Call, and the 9th and 10th most traded contracts today were: 9: XLF June 10 Call, and 10: XLF June 10 Put.

This shows that many are betting on financials to go higher before they go any lower. This could be a sign that the financials could be due for a short term rally, but it could also be pure speculation about the "bad" bank plan that may come out in the next week or so. Either way I have decided to follow the options market, as it seems to predict the market quite well, and I will be buying some Call contracts to see if I can cash in.


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