Options Trading News

November 16, 2012  Fri 11:04 AM CT

The biggest option action of the day so far is a single trade in the iShares Emerging Markets Fund.

A trader sold a block of 99,999 November 40.50 puts for the bid price of $0.42 against open interest of more than 137,000 contracts, according to optionMONSTER's Depth Charge system. Seconds later he or she bought 99,999 Weekly 40 puts for the ask price of $0.62.

Those weekly puts are new contracts introduced in the EEM and nine other underlying assets this week, which now have a full month of consecutive weekly options to trade. The EEM is now fourth on today's top-volume list, now with 373,000 options traded.

This is clearly a roll as the regular monthly November options expire today. The trader wants to continue having downside exposure, which may well be a hedge against a long position. (See our Education section)
The EEM off a penny at $40.28 in early afternoon trading. While the exchange-traded fund has followed the U.S. markets lower, it is just back to where it was at the beginning of September. The EEM was up at resistance at $42 two weeks ago.
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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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