CNBC Stock Blog

ETFs See Downside Activity as Bears Take Over


There was a bacchanalia of downside activity in exchange-traded funds yesterday as bears took charge of the market.

OptionMonster's tracking systemsshowed put volume of almost triple the average in the SPDR S&P 500 ETF. It was more than twice the normal level in the two other major funds: the iShares Russell 2000 Index and the PowerShares QQQ Trust, which tracks the Nasdaq 100.

The SPY fell 2.35 percent yesterday, while the IWM and QQQQ both lost more than 3 percent. The good news is that most of the activity resulted from investors unloading existing protective positions rather than implementing new downside strategies.

Similar transactions were detected in the Financial Select Sector SPDR, where put volume surged to an unusually high 3-to-1 ratio versus calls.

The most outright negative trades occurred in the SPDR S&P Metals & Mining exchange-traded fund, where an investor rolled a downside position to a lower strike. XME puts outnumbered calls by a whopping 11 to 1.

The options action came amid in a surge in the VIX , which popped above 25 percent—its highest level since Feb. 11.

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Jon 'DRJ' Najarian is a professional investor, CNBC contributor, and cofounder of