This is the time of year when many investors expect the consumer discretionary sector to be a solid bet and data suggest some traders are making related bets on the Consumer Discretionary Select Sector SPDR (NYSEArca: XLY). XLY is the largest exchange traded fund tracking the consumer discretionary sector.
XLY is up about 16% year-to-date, a performance owed in large part to the ETF’s almost 17% weight to Amazon.com Inc. (NASDAQ: AMZN). That is more than double the weight allocated to XLY’s second-largest holding.
Early Thursday, “roughly 3,600 calls had traded on XLY, two times what’s typically seen. By contrast, a lower-than-expected 109 put contracts were on the tape. The March 95 call is once again most active — echoing yesterday’s intense options trading,” according to Schaeffer’s Investment Research.
As the market moves toward the late stages of the business cycle, consumer discretionary stocks and sector-related exchange traded funds could underperform other market segments. However, it is clear XLY is rebuffing that idea this year. XLY holds 85 stocks and tracks the Consumer Discretionary Select Sector Index.