Commodity Options Traders Place Record Bearish Bets Against ETF Tracking Energy & Metal Prices

Bloomberg is reporting that commodity options traders have placed record bearish bets against the iShares S&P GSCI Commodity-Indexed Trust, an exchange-traded fund tracking energy and metals prices, after a rally to a two- year high.

According to Bberg, the open interest for puts to sell the ETF doubled this week to a record 18,797 outstanding contracts, lifting the ratio of puts per call to a three-year high of 3.28-to-1. Traders betting on a 5.4% drop in five weeks lifted put volume to a record 7,915 contracts yesterday, 720 times the number of calls to buy.

Bberg: “Investors see the potential for downside,” said Paul Justice, director of ETF research at Morningstar Inc. in Chicago. “You’re going to see less investor interest in commodities as the economy continues to recover and people feel more comfortable getting back into stocks.”

The ETF lost 0.7% to $34.35 yesterday, retreating from the highest closing level since November 2008.

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