Options Trading News

February 5, 2013  Tue 2:45 AM CT

A large trader is apparently expecting a sharp move in iShares Emerging Markets Fund.

optionMONSTER's Depth Charge system shows that a trader bought 8,500 September 36 puts for $0.65 yesterday. This clearly a new purchase, as the volume was more than 9 times higher than the strike's open interest of 908 contracts before the session began.  

A minute later 119,000 shares of EEM were bought for $44.05. Combined with the puts, this creates a so-called delta-neutral strategy that is betting on higher volatility. This means that the trader is looking for a big move either up or down in the exchange-traded fund. (See our Education section)

The EEM fell 1.31 percent to $43.92 yesterday, its second-lowest close so far this year. It hit a 52-week high of $45.33 on the first day of 2013 but has been slowly losing ground since.
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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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