Options Trading News

February 26, 2014  Wed 3:47 AM CT

A large trade is looking for a sharp move higher or lower in the iShares China Large-Cap Fund.

optionMONSTER's Depth Charge tracking system shows that 29,450 August 30 puts were bought for the ask price of $0.91 yesterday. This is a new position, as its volume is well above the strike's previous open interest of 17,514 contracts.

Just afterward, a block of 556,600 shares was bought for $34.79. That would make the overall position delta-neutral and therefore focused on a big move in either direction and/or higher volatility than that implied by the options' price. The implied volatility of the puts is 28 percent, just a bit above the FXI's 10-day historical volatility. (See our Education section)

The FXI fell 1.73 percent to $34.70 yesterday. The exchange-traded fund has been trending lower since hitting a 52-week high above $40 in early December.

More than 162,000 FXI options changed hands on the day, more than twice its daily average for the last month.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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