Heavy option volume in the iShares MSCI EAFE Index Fund today is led by what seems to be a large hedging strategy.
A trader bought 129,550 April 57 puts for the ask price of $1.08 and sold the same number of the December 68 calls for the bid price of $0.36, according to optionMONSTER systems. Open interest at each strike was fewer than 8,000 contracts at the start of the session, so this is clearly a new position.
This combination trade is very likely a type of collar to protect long stock, using the sale of the longer-term calls to help offset some of the cost of the puts. It is still bullish if it is done against shares of the EFA, but only up to the $57 strike price. (See our Education section)
The EFA is down 0.4 percent to $58.42 after hitting a 52-week high of $59.59 last week. The exchanage-traded fund, which tracks stocks in Europe, Asia, and Australia, has been trending higher from support at $47 in early June.
More than 260,000 EFA options have traded overall so far, compared to a daily average of 45,000 over the last month.
Options Trading News
Related Stories
EFA
Downside play in Europe-Asia fund
May 3, 2013
The iShares EAFE Index Fund has climbed to a two-year high, but a large put spread is looking for shares to trade lower by autumn.
EFA
Show of support in Europe-Asia ETF
April 29, 2013
The iShares EAFE Index Fund is at 52-week highs, and one huge trader apparently believes that any pullbacks in the global ETF will be limited in the next few months.
Social Media
Follow optionMONSTER for news and updates
Premium Services
-
Semi-active traders looking for simple calls and spreads (5 per week).
Learn More -
Entry-to-mid level traders looking for full circle trade analysis (1 per week).
Learn More -
Tailored, one-on-one education designed and led by Jon & Pete (3 months and up)
Learn More
Education & Strategy
So why do we bother with spreads?
Trading options allows for far deeper levels of complexity than stocks. And while you may never fully venture all the...
