What’s The Reasoning Behind This Massive Energy Trade?

Dividend Investing, Energy Investing
by Jay Soloff
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Unusual options activity placed Energy Select Sector SPDR ETF (XLE) into the spotlight last week. It turns out a massive options trade of 150,000 contracts traded in a spread, with about $16 million of capital required. This one trade accounted for nearly half the options traded on the day. It appears the position may be a very large hedge against a downturn in energy prices through December. 

Author: Jay SoloffJay Soloff is the Options Portfolio Manager at Investors Alley. Jay is also the editor for 48-Hour Income, Options Insiders, and co-editor of Weekly Income Accelerator and POWR Income with Tim Plaehn. Prior to joining the online investment world, Jay was a floor trader and market maker on the CBOE, the world's largest options exchange. His experience includes trading a multi-million dollar options portfolio in equities options as well as serving as a consultant to Wall Street options trading groups. Jay also spent time as a senior analyst at a hedge fund of funds, where he analyzed professional options funds as well as traded option strategies for hedging purposes. All told, Jay has 20 years of options trading experience. He received his undergrad degree in Economics at the University of Illinois - Champaign, and his MBA and Master of Science in Information Management from Arizona State University.
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