An institutional trade caught our eyes this morning.  Investors are looking for a continued decline in energy shares via the XLE.  Interesting trade here.  The IB options desk has the details:

XLE – Energy Select Sector SPDR – The exchange-traded fund, which mirrors the performance of the Energy Select Sector of the S&P 500 Index, popped up on our ‘most active by options volume’ market scanner after a butterfly spread unfurled its wings in the December contract. Shares of the XLE are off 1.5% to stand at the current price of $56.30. The spread indicates one bearish investor expects shares of the fund to gravitate lower by expiration next month. The trader established the pessimistic play by purchasing 5,300 in-the-money puts at the December 57 strike for a premium of 2.47 apiece [wing 1] and by picked up another 5,300 puts at the lower December 51 strike for 66 cents premium each [wing 2]. Finally, the trader sold 10,600 puts at the central December 54 strike for a premium of 1.27 apiece [body].The net cost of the transaction amounts to 59 cents per contract and yields maximum potential profits of 2.41 each if shares settle at $54.00 by expiration. Profits begin to amass if shares slip beneath the breakeven point at $56.41.

Source: IB