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July 9, 2013  Tue 2:45 AM CT

EEM: SEE CHART GET CHAIN FIND STRATEGIES
A huge trade is counting on limited upside in the iShares Emerging Markets Fund.

optionMONSTER systems show that a trader bought 57,000 August 40.50 calls for the ask price of $0.19 and sold the same number of August 39 calls for $0.52 yesterday. The volume was more than twice the previous open interest at each strike, indicating that this is new positioning.

This strategy is known as a credit spread and takes in $0.33, which the trader will keep as profit if the EEM remains below $39 at expiration in mid-August. The maximum potential loss is $1.17 if it is above $40.50 at that time. (See our Education section)

The EEM was up fractionally yesterday to close at $37.39. The exchange-traded fund was above $44 in early May but fell to $36.16 two weeks ago, its lowest intraday price since November 2011.
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Education & Strategy

Gamma

As we continue to discuss the Greeks, we come to the first of the strike based Greeks called Gamma. Gamma is known as the second derivative, while delta is the first.

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