KRE (Regional Banking ETF) is trading $20.98, down 1.6% today with IV30™ spiking up 10.5%. <img src="http://3.bp.blogspot.com/_hMry1m7UF10/THVP4ZNq4FI/AAAAAAAAEVc/uQbuFnWPw_w/s1600/kre_summary.gif"> The ETF has traded over 9,700 options on total daily average option volume of just 3,047. The most interesting trade to me is an Oct 21 straddle purchase 1,700x . The Stats Tab and Day's biggest trades snapshots are included (<a href="http://livevol.blogspot.com/2010/08/kre.html">in the article</a>). The Options Tab (<a href="http://livevol.blogspot.com/2010/08/kre.html">in the article</a>) illustrates that both the calls and the puts are mostly opening (compare OI to trade size). I've also highlighted the OI in three lines in Dec. A huge Dec 19/23 put spread purchase funded by Dec 26 call sale went up 7-29-2010. The straddle purchase today and put spread purchase in July are both bets on a vol jump and a down move in the ETF. The IV30™ was up 5.3% yesterday. Add that to the climb today and we're looking at over 15% short term vol jump in two days. Note that the banking stocks can be very sensitive to market sentiment; particularly negative sentiment. The Skew Tab snap (<a href="http://livevol.blogspot.com/2010/08/kre.html">in the article</a>) illustrates the vols by strike by month. We can see the ATM vols for Oct (yellow) and Dec (green) lie on top of each other. Sep is just a bit below. Finally, the Charts Tab (6 months) is below (<a href="http://livevol.blogspot.com/2010/08/kre.html">in the article</a>). The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue). The yellow shaded area at the very bottom is the IV30™ vs. the HV20™ vol difference. Note first how the ETF price has declined of late. The 52 wk. high is $29.79. More impressive is the vol jump of late. Just last week the IV30™ was 33; it's up more than 20% since. <b>Possible Trades</b> If you're bearish but want to sell the elevated IV30™, a Sep 20/19 1 x 2 put spread for even looks decent. Maybe purchase 1 Sep 17 put for $0.07 if that's cheaper than carrying the margin. A little more bearish but more expensive is a Sep 21 put purchase against 2 Sep 19 put sales for a net debit of $0.45. Again, buying a cheap put on the downside may be less expensive than carrying the margin. Contrarian trades: Sell straddles. This is trade analysis, not a recommendation. Details, trades, prices, vols, skews, charts here: http://livevol.blogspot.com/2010/08/kre.html Legal Stuff: <a href="http://www.livevolpro.com/help/disclaimer_legal.html">http://www.livevolpro.com/help/disclaimer_legal.html</a>