Options Trading News

May 16, 2013  Thu 1:47 AM CT

The iShares MSCI Germany Fund has leveled off after a sharp run in recent weeks, and one large trader is apparently expecting shares to continue trading sideways.

optionMONSTER systems show that more than 20,000 EWG options traded on the day, compared to the daily average of just 996. Virtually all of the volume was in one strike.

A trader sold 19,903 June 26 calls for the bid price of $0.65, according to optionMONSTER systems. This is clearly a new position, as the strike's open interest was just 253 contracts before the trade appeared.

The call selling wasn't tied to any trading in the underlying shares that we can see. But given that these contracts are in the money, they were almost certainly sold against an existing long position in a covered call position that is looking to profit from range-bound trading. (See our Education section)

The EWG was down fractionally on the day, closing at $26.15. It opened below $26 and climbed for most of the session, hitting its intraday high just before the closing bell. Shares have climbed from support around $23.70 in the last month, reaching a 52-week high of $26.42 last week.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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