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November 12, 2013  Tue 4:14 AM CT

EEM: SEE CHART GET CHAIN FIND STRATEGIES
A gigantic put trade is apparently looking for a drop in the iShares Emerging Markets Fund.

optionMONSTER systems show that 790,000 EEM options changed hands yesterday, making it second in total volume only to only the SPDR S&P 500 Fund. Amazingly, most of that volume is in one trade.

A trader sold 210,953 November 42.50 puts for $1.60 against previous open interest of 238,704. At the same time, he or she bought 248,663 December 41.50 puts for the ask price of $1.55 in volume well above that strike's open interest of roughly 76,000, so it is a new position.
 
Although it is possible that these puts are a hedge on long stock, it is unlikely because they are in the money. So it appears that this trader is rolling a bearish position out a month and to a lower strike price. (See our Education section)

The EEM fell 0.51 percent to $40.95 yesterday, its lowest close since the end of September. The exchange-traded fund was testing $44 just three weeks ago.
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Options Academy: At the Break

So far, my articles have taken you through a logical progression of option theory and fundamental concepts of options. As of yet, I have not mentioned a single strategy and for a good reason! The actual application of a strategy should come AFTER you learn about the option product itself.

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