Market News

December 30, 2016  Fri 11:31 AM CT

Traders are looking for the iShares MSCI Mexico Index Fund to continue its recent rebound in coming weeks.

Mexican stocks plummeted after the presidential election of Donald Trump, who had criticized immigration and trade policies with the country throughout his campaign. But EWW has come off its recent lows in the last week, and today our systems detected an upside strategy in the exchange-traded fund:

  • 5,000 January 45.50 calls were bought for $0.42 against open interest of 657 contracts.
  • 5,000 January 43 puts were sold mostly for $0.44 below open interest of 10,395 contracts.

This combination trade is especially bullish because a rally would boost the price of the long calls while decreasing the value of the puts that were sold. But the opposite will occur if the stock drops, and the trader will be on the hook to buy shares if they fall below $43 by expiration. (See our Education section)

EWW is off 0.45 percent to $44.01 in midday trading and has dropped more than 16.5 percent since the Nov. 8 election. Total option volume has surpassed its full-session average as calls outnumber puts.

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