Today's tickers: IYR, SCHW, UNG, & AMTD

IYR - iShares Dow Jones U.S. Real Estate Index ETF - Shares of the real estate fund have slipped slightly by less than 1% today to stand at $31.18. Bearish sentiment by option investors was seen in the August contract where one investor bracing for downward movement in the price of the ETF initiated a put spread. The spread involved the purchase of 3,000 puts at the August 30 strike price for a premium of 1.60 per contract against the sale of 3,000 puts at the lower August 27 strike for 65 cents apiece. The net cost of the pessimistic position amounts to 95 cents and yields maximum potential profits of 2.05 if shares were to decline to $27.00 by expiration next month. The market price of IYR would need to decline approximately 7% before the trader responsible for the transaction begins to amass profits at the breakeven point of $29.05.

SCHW - Charles Schwab Corp. - It appears that an investor might be rolling a significant amount of call open interest in the July 18 series to the same August strike this morning. Shares of the broker are 1.3% higher at $17.00 having spent the last month gradually easing from a peak of $18.88. Volume at the July contract of 13,600 contracts has been matched by the pattern in the August contract where the investor appears to be extending the time horizon of a trade in which he expects Schwab's share price to rally back towards the June peak. The trader is selling out the July calls in exchange for August at a net 25 cent cost today. Option implied volatility has risen to 41.5% from a reading of 37.8% last week.

UNG - U.S. Natural Gas Fund - Option traders have been busy buying up puts on the natural gas fund today as fears for a double-dip recession prey on energy complex weaknesses. Signs of a crack in the price of oil were pounced on by short-sellers who quickly shaved $2.40 off the price of crude for August delivery. Natural gas prices, which have failed to maintain pace with rising oil since the March-time low, reached a fresh one-year low today at $3.42 per BTU. The natural gas ETF, which is a pure play on the price of natural gas stayed true to form and put in a fresh low of its own at $12.31. Meanwhile, option traders appeared to be rolling existing bear plays looking for a further leg lower for gas prices. Many analysts have sounded off highly positive notes on the prospects for this laggard, yet the reality appears to be for a collapse even though hurricane season is now into its second month. Investors sold July 12 strike puts to buy further away-from-the-money protection at the August 10 strike today. July puts were sold at 31 cents to pay 22 cents for August puts.

AMTD - TD Ameritrade Holding Corp. - The financial services firm has bucked today's downward trend by enjoying a more than 2% rally in shares to $17.15. We observed one investor taking profits today by closing out a short position in the near-term August contract. It appears that the trader originally sold approximately 5,000 calls short at the July 17.5 strike price for a volume-weighted average price (VWAP) of 1.27 apiece back on June 3, 2009. Today he has bought back the calls for just 27 cents and pocketed 1.00 per contract. Call selling some 5,600 times at the August 17.5 strike price for 70 cents each may be indicative of a repeat performance by the trader. He will similarly realize profits by expiration if he is able to purchase-to-close the short position for less than 70 cents.

Andrew Wilkinson
Senior Market Analyst
ibanalyst@interactivebrokers.com

Caitlin Duffy
Equity Options Analyst