Bearish Options Bets Roll In Against The XLF

Analyst Paul Weisbruch of Street One Financial brings us his daily fund flows report, which today points out continued weakness in financials, along with some outflows in energy funds following last week’s big crude oil bounce.

We have spoken about the waning relative strength in financials in past recaps heading into earnings for the group, which kicked off late last week. We saw some related options activity in XLF (SPDR Financials), with June 22 puts trading late last week.

Even though these options are about $1 out-of-the-money, they still have considerable time left until expiration, and XLF has come in notably from its $25 handle back at the very beginning of March. Thus, we are watching Financial “Bear” ETFs as mentioned previously, given the recent weakness in the sector, notably FAZ (Direxion Daily Financial Bear 3X, SEF (ProShares Short Financials), and SKF (ProShares UltraShort Financials).

Also last week, on a sustained bounce in Crude Oil prices, we saw some position trimming in two Energy Equity based ETFs, XLE (SPDR Energy) and XOP (SPDR Oil & Gas Exploration & Production), with about $200 million leaving the funds apiece.

The Financial Select Sector SPDR Fund (NYSE:XLF) was trading at $23.08 per share on Monday morning, up $0.18 (+0.79%). Year-to-date, XLF has declined -0.73%, versus a 4.58% rise in the benchmark S&P 500 index during the same period.

XLF currently has an ETF Daily News SMART Grade of B (Buy), and is ranked #9 of 38 ETFs in the Financial Equities ETFs category.

Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

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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