How to Play IYR ETF Options

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Sept. 18 (Bloomberg) -- MKM Holdings Derivatives Analyst Jim Strugger discusses his options play for IYR ETF with Scarlet Fu on Bloomberg Television's "Market Makers." (Source: Bloomberg)

My guest is looking at exchange traded funds that track the real estate send -- real estate sector.

@2:00, we expect to get some resolution from the bed about their plans to taper the quantitative easing program.

You have had 10 year yields go from 1.6 two 3% grade implied volatility has gone significantly higher.

The move index measures that.

We think some equity industry groups should benefit as well.

You are looking at the iyr and a call there.

Why do you want to pursue this strategy?

From may until recently, the two worst-performing groups on the s&p 500 were real estate and utilities, for obvious reasons.

What we are suggesting is as it comes it, these industry groups could do better.

We are looking at the iyr as a beneficiary, about 10%. we want to be long the underlying etf that pays a 4% dividend, but we also like playing a more leveraged upside.

We are going out to december, putting something like a 65 or 70 call spread, so in a position like that, you pay $1.40, that's all the risk and you potentially make $3.60. why not do something that expires more soon?

Because we are not looking at a -- at a significant catalyst other than some revolution from the fed very that's what most investors are anticipating.

This text has been automatically generated. It may not be 100% accurate.

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