At least one big trader is buying puts in the IYT exchange traded fund, looking for the transport sector to take a dive.
OptionMonster's tracking systems detected the purchase of 10,000 August 46 puts for $0.70 and $0.75 against open interest of just 56 contracts this morning in the iShares Dow Jones Transportation Average ETF. The transaction was 14 times larger than the average daily options volume in the name.
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The IYT, which is down 1.62 percent to $53.95 in morning trading, has fallen 10 percent in the last month. The ETF will have to drop another 16 percent in next six weeks of the trade to turn a profit.
If the wager is right, it would have bearish implications for the broader market because transports are often considered a leading sector. The fund's largest holdings include Burlington Northern, United Parcel Service, and Federal Express.
David Russell is a reporter and writer for OptionMonster.