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Options Trading News

October 4, 2012  Thu 10:41 AM CT

EFA: SEE CHART GET CHAIN FIND STRATEGIES
The iShares EAFE Index Fund has been drifting lower, but one large trade is betting against a collapse in the next year.

The exchange-traded fund, which tracks stock in Europe and Asia, is up 0.9 percent at $53.91 this morning. The EFA has been trending lower since trading up to $55.58 on Sept. 14, its highest price since reaching a 52-week high in March.

optionMONSTER's systems detected the sale of 10,000 September 2013 40 puts for the bid price of $1.29. Open interest in the strike was just 425 contracts at the beginning of the day, so this is a new position.

The put selling has an initial bullish bias but can profit with the EFA anywhere above $40 at expiration about a year from now. (See our Education section)
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Real vs. Synthetic

We now know that there are two ways of creating a call position, a put position, and a stock position. We can simply use the actual real security or we can recreate it synthetically. We can create these positions in both long and short forms and this ability sets up an interesting scenario--an arbitrage!

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