Options Traders Increase Bearish Bets on Financials (FAZ)

Shares of the Direxion Daily Financial Bear 3X ETF (NYSE: FAZ) are higher on the session by 6.19%, currently trading at $15.83. The ETF has been trading largely higher over the past two weeks as pessimism towards the market, especially the financials, grows.

Interestingly, call volume on the FAZ, which is a highly leveraged bet on the downside in financials, has been growing. For the past eleven trading days, call volume has outpaced put volume by over 2 to 1. Today, over 38,000 calls were traded versus only 12,000 puts. Traders are making upside bets in nearly every month.

The August $15.00, $16.00, and $17.00 calls are seeing the majority of the buying today, which is notable given that they expire this week. The September $15.00, $16.00, $17.00, and $18.00 calls have the next highest volume, nearly all contracts purchased.

Traders are worried about a fall in the market; the technicals are working against the bulls right now, placing indexes at key pivot points. Coupled with today’s Philly Fed data, which was terrible, these downside bets seem justified.

The Direxion Daily Financial Bear 3X ETF seeks daily investment results, before fees and expenses, of 300% of the inverse of price performance of the Russell 1000 Financial Services index. The fund normally creates short positions by investing at least 80% of net assets in financial instruments that, in combination, provide leveraged and unleveraged exposure to the index. It is nondiversified.