Options Trading News

December 20, 2012  Thu 9:15 AM CT

A large call sale tops today's option activity in the iShares Emerging Markets Fund.

optionMONSTER systems show that a single print of 80,500 EEM March 47 calls is by far the largest trade of the day so far, but it isn't overly bullish. The calls were sold for the bid price of $0.36 in volume far above the previous open interest of 3,257 contracts, so this is a new position.

These calls could have been sold naked with an initial bearish bias, though that position could profit with the EEM anywhere below $47.36 at expiration. The options could also have been traded against long stock in a covered call strategy, but they would need 8.05 million EEM shares to change hands for that position. (See our Education(See our Education section) section)

The EEM is up 0.14 percent to $43.57 this morning. The exchange-traded fund has been trending higher since hitting a 52-week low under $37 in late May and is now back to levels from early April.
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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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