U.S. options traders dove into protective hedges in exchange-traded funds that track sectors ranging from agriculture to emerging markets Tuesday even as U.S. stocks jumped higher in the final hour of the trading day on news of possible concrete steps to address Europe's sovereign-debt crisis.

Defensive trading patterns surfaced in funds such as the Market Vectors Agribusiness ETF (MOO), in which options volume jumped to a record high. Market observers said the activity bore hallmarks of risk-averse traders re-evaluating their outlooks after an impressive October run-up in U.S. stocks. The Dow Jones Industrial Average fell 2.1% Monday, ending what had been a 6.8% nine-session rise.

"Opening put buyers were overwhelming call trades," Etai Friedman, head of equity-derivatives trading at MKM Partners LLC, told Dow Jones Newswires. Put options give the right to sell shares by a set expiration, while call options give the right to buy shares. Generally, buyers of puts profit from declines in shares.

"I think it's re-establishing short positions after this rally," Friedman said. "Fundamentally, nothing has really changed in the macro sense: Europe is still uncertain; the U.S. economy is still hanging on by a thread; there are signs growth in China is slowing."

Pessimism-streaked options trading was most notable in the Market Vectors Agribusiness ETF, which has its largest holdings in fertilizer and seed producers such as Potash Corp. of Saskatchewan Inc. (POT) and Monsanto Co. (MON), as well as machinery makers such as Deere & Co. (DE).

Daily options volume in the MOO hit an all-time high Tuesday. Activity tipped grossly in favor of bearish put options. More than 25,000 puts crossed the tape by late Tuesday, compared with just 484 call options, according to Trade Alert LLC, a New York-based options data provider. Fewer than 1,500 contracts typically trade each session.

Traders opening new positions in the MOO targeted contracts that expire in February and May. One buyer picked up a large block of February $42 puts that profit should shares of the fund fall 18% over the next four months. In another trade, targeting May $38 puts, the trader's options profit should shares tumble 27% over the next seven months. The fund rose $1.00, or 2.1%, to close at $48.20.

Similarly bearish trading in the MOO hit the options market Monday, where investors staked out new positions in February $40 put options.

Elsewhere, among the largest trades across the options market were bets that the iShares MSCI Emerging Markets Index Fund (EEM) won't muster a rally heading into next year. One trader sold more than 90,000 December $40 call options, according to derivatives strategists at Susquehanna Financial Group. Another sold about 10,000 October $40 calls. Selling call options allows the trader to pocket premium, and often implies the investor has little confidence that shares can push above the exercise price. The EEM rose $1.02, or 2.7%, to close $39.27.

The rush to open positions with protective options extended to the SPDR S&P Oil & Gas Exploration and Production ETF (XOP) and the Materials Select Sector SPDR Fund (XLB). In both, traders looked to cushion stock declines with contracts that expire in December and March.

In the XOP, which is made up of stocks including Range Resources Corp. (RRC) and Cabot Oil & Gas Corp. (COG), traders bought bundles of December $45 puts and March $40 puts. The XOP rose $1.97, or 3.9%, to finish at $52.12.

For the XLB, weighted most heavily in DuPont Co. (DD) and Freeport-McMoRan Copper & Gold Inc. (FCX), traders opened positions in December $29 puts and March $26 puts. Shares of the ETF rose 83 cents, or 2.6%, close at $33.17.

-By Chris Dieterich, Dow Jones Newswires; 212-416-2611; christopher.dieterich@dowjones.com