Today we point out heavy put activity in generally infrequently traded iShares iBoxx $ High Yield Corporate Bond (NYSEArca: HYG) options. This particular ETF is often seen as a “risk-on” play in that it targets exposure to high yield “junk” bonds, so it is very possible that a bearish speculator is looking for a reversal in the high yield corporate market (note that HYG traded at a new 52 multi-year high just as recently as Wednesday of this week).
It is also quite reasonable that a large institutional long term holder of the ETF is hedging an underlying position in HYG via these put trades. HYG has been a winner in 2012, rallying 4.52% YTD with trailing one year performance of +7.90%.
Yield thirsty investment managers have likely been attracted to the fund (30 Day SEC Yield of 5.58%) in 2012, as the ETF has reeled in an impressive $4.7 billion just year to date. [High-Yield ETFs Rallying to Cap Historic Year]
Top holdings in HYG currently are corporate bonds issued by the following companies 1. Sprint Nextel (0.62%), 2. CIT Group (0.59%), 3. HCA (0.52%), 4. Intelsat (0.50%), and 5. First Data (0.49%).