OptionsHouse

Options Trading News

January 8, 2013  Tue 3:16 AM CT

EWJ: SEE CHART GET CHAIN FIND STRATEGIES
A long-term bullish trade topped yesterday's option activity in the iShares MSCI Japan Fund even as it fell again.

A trader bought 5,000 January 2015 10 calls for $1.08 and sold 10,000 January 2015 8 puts for $0.48, according to optionMONSTER systems. The volume was well above the previous open interest at each strike, indicating new positioning.

This combination trade, also a ratio spread because of the differing number of contracts, was using the sale of the puts mostly to offset the cost of the long calls. The trader spent only $0.12 to open the position, which is the amount at risk if the EWJ remains above $8. If the stock is below that price, the trader faces assignment the obligation to buy 1 million shares. (See our Education section)

The EWJ finished the day at $9.77, down 0.86 percent but off its session low of $9.72. The exchange-traded fund ended the first day of the year at $9.99, its highest close since gapping down from above $10 at the start of April.
Share this article with your friends


OptionsHouse

Premium Services

Archived Webinar

Education & Strategy

Real vs. Synthetic

We now know that there are two ways of creating a call position, a put position, and a stock position. We can simply use the actual real security or we can recreate it synthetically. We can create these positions in both long and short forms and this ability sets up an interesting scenario--an arbitrage!

View more education articles »