Despite the bullish tone to the market today options traders weren’t lured into the bullish move.  Bearish bets were seen in the S&P retail ETF:

XRT – SPDR S&P Retail ETF – Disappointing earnings from a number of retailers such as Aeropostale and American Eagle Outfitters, declining same-store sales at Whole Foods, and gloomy guidance at CVS Caremark Corp are just some of the factors weighing down the retail exchange-traded fund today. Shares of the XRT started the trading session higher but have since edged 1% lower to $33.97. Curiously, dismal data from the retail sector this morning is not curtailing overall market gains. Option trading by one investor on the fund suggests shares are likely to trend lower by expiration in December. The trader appears to have established a short strangle in combination with a long put position. The strangle portion of the strategy involved the sale of 5,000 calls at the December 35 strike for 92 cents apiece and the sale of 5,000 puts at the December 30 strike for 56 cents premium. The gross premium of 1.48 on the strangle more than offset the cost of purchasing 5,000 puts at the December 33 strike for 1.45 apiece. The investor pockets a 3 cent credit on the three-legged transaction, which he retains in full as long as shares of the XRT remain ‘strangled’ within the confines of the 30/35 strike prices through expiration. Additional profits accumulate if shares decline beneath $33.00. The trader will benefit from lower volatility as well as bearish movement in the price of the underlying shares through expiration in December.

Source: IB