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September 25, 2013  Wed 10:13 AM CT

EPI: SEE CHART GET CHAIN FIND STRATEGIES
The WisdomTree India Earnings Fund is facing a long-term bearish position.

optionMONSTER systems show that a trader bought 5,000 January 2015 14 puts for the ask price of $1.55 and, at the same time, sold 5,000 January 2015 16 calls for $1.70. This bearish combination trade may well be a protective collar on long shares.

About 50 minutes before this combination appeared, 10,000 January 2016 16 puts were sold for $3 in volume below that strike's previous open interest of 41,000. So it could be that the trader is closing this position and rolling it backward into the 2015 trade. (See our Education section)

The EPI is down fractionally on the day at $15.68. It was hit a low of $12.99 at the end of August and was above $19 in mid-May.

More than 20,000 EPI options have changed hands so far this morning, already triple its full-session average for the last month.
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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.

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