OptionsHouse

Options Trading News

September 24, 2013  Tue 11:09 AM CT

FXI: SEE CHART GET CHAIN FIND STRATEGIES
The iShares FTSE/Xinhua China 25 Large-Cap Fund lagged the S&P 500 for about two years as the country's economy slowed, but activity has increased and share prices are catching up.

The FXI is down 0.87 percent to $38.31 today but has started to outperform recently, surging 20 percent in the last three months, compared with a gain of just 8 percent by S&P 500 during that time. Today's option action is looking for the strength to continue, highlighted by the purchase of more than 15,000 November 40 calls, most of which priced for $0.58.

These long calls lock in the price where the fund can be purchased, letting investors cheaply position for a rally and potentially generating significant leverage. Shortly before the November calls were bought, almost 5,000 of the October 39.50s were sold for $0.34.

Volume was below open interest in those, suggesting that an investor rolled a position forward in time. If that's the case, they also increased its size and put more capital at risk on the long side. (See our Education section)

Most gauges of manufacturing activity on the mainland have beaten expectations in recent months, including HSBC's flash purchasing managers index yesterday morning. Our researchLAB market scanner has also detected a solid flow of capital into firms operating in the country--especially those doing business online.

Calls outnumber puts in FXI by more than 4 to 1 so far today, a strongly bullish proportion.
Share this article with your friends


Related Stories

FXI

Huge trade sees bottom in China ETF

January 28, 2016

A large position is betting that downside potential will be limited in the iShares FTSE/Xinhua China 25 Index Fund for most of 2016.

OptionsHouse

TRADING WEEKLY OPTIONS

The fastest money in the market
View full report »

Premium Services

Upcoming Webinar:

Using Options For Income

http://bit.ly/1nY1OKA

Jon Najarian and Adam Mesh of Options Wealth Machine discuss a detailed strategy utilizing credit spreads to generate income, and how any level of trader can use this simple trading technique.

Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

View more education articles »