OptionsHouse

Options Trading News

November 13, 2012  Tue 4:15 AM CT

FXI: SEE CHART GET CHAIN FIND STRATEGIES
Everyone has been worried about America's "fiscal cliff," but yesterday investors focused on growth in China.

optionMONSTER's Heat Seeker system detected a surge of call volume in the iShares FTSE China 25 Index exchange-traded fund, which has been quietly outperforming the S&P 500 and other emerging markets in the last three months.

More than 68,000 November 37 calls were sold for $0.23 against open interest, indicating that an existing position was closed. An equal number of December 38 calls were then bought for $0.48, so it looks as if the calls were rolled one month into the future.

Calls lock in the price where investors can buy stocks and funds, so they can control moves for a fraction of the price of the shares. The drawback is that they expire, and yesterday's trader was adjusting his or her position to keep from seeing the November contracts go to zero this Friday. The roll cost $0.25 and allows another five weeks to profit from upside in the fund. (See our Education section)

The FXI rose 0.25 percent to $36.55. Recent economic data from China has been improving, and Australia's refusal to cut rates last week reflected the growing strength in its biggest trading partner to the north. That could offset a weakening economic picture in Europe and concerns about higher taxes and less government spending in the United States.

Total option volume was more than twice the daily average, with calls outnumbering puts by a bullish 5-to-1 ratio.

(A version of this post appeared on InsideOptions Pro yesterday.)
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 »