The SPDR S&P Homebuilders ETF (NYSEArca: XHB) is up 14.3% year-to-date and the popular homebuilders exchange traded fund jumped more than 2% ahead of this week’s Federal Reserve meeting, but some traders took bearish options positions in XHB ahead of the Fed meeting.
On Tuesday, options in XHB were “crossing at 22 times the average intraday pace, with roughly 15,000 contracts exchanged. That’s about 10 times the number of XHB calls traded so far, though call volume on the homebuilders exchange-traded fund (ETF) is running at four times the norm. Further, put volume is pacing to hit the 97th percentile of its annual range,” reports Schaeffer’s Investment Research.
XHB’s well-known rival is the iShares U.S. Home Construction ETF (NYSEArca: ITB). The equal-weight XHB mixes stocks such as Tempur Sealy (NYSE: TPX), Williams-Sonoma (NYSE: WSM) and Restoration Hardware (NYSE: RH) with pure play homebuilders such as Lennar (NYSE: LEN) and Toll Brothers (NYSE: TOLL) among others.
ITB tracks the Dow Jones U.S. Select Home Construction Index while XHB follows the S&P Homebuilders Select Industry Index.