Unusual Put Activity In XHB (SPDR Homebuilders)

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XHB Options Scan

My options scanner has picked up unusual put activity in XHB. Take a look below and you will see that there already is a sweet setup with a large put open interest compared to the call open interest. However, what really stands out is that there was 37061 near strike put activity for a near put open interest of 50479. That is a huge potential shift in the near put open interest.

XHB Options Scan

If we go to Yahoo Finance and check the put option sheet to validate my scanner’s findings, sure enough we see the unusual put activity.

XHB Fri Jul 26

Best of all, checking Yahoo Finance this morning (after 7 AM), we see that most of the unusual put activity was due to put positions being opened.

The question remains, why would someone or some people open up fresh put positions after XHB has fallen from 31.00 to 29.61 (see the 6 month chart below)? The 6 month chart does look good for additional downside. Notice how weak the MACD is. If you look at the 12 month chart below, you will see actually XHB is in a giant topping pattern with a neckline around 28.00 and a target around 24.00. My guess is the new puts are gunning for the breakdown from the topping pattern.

XHB 6 Month

XHB 12 Month