OptionsHouse

Options Trading News

November 20, 2012  Tue 10:38 AM CT

FXI: SEE CHART GET CHAIN FIND STRATEGIES
The iShares FTSE China 25 Fund is giving up some of yesterday's gains, but a huge trade sees a floor beneath the shares in the long term.

optionMONSTER's systems show that a trader sold 25,000 January 2014 32 puts for the bid price of $2.54. The previous open interest was 1,664 contracts, so this is a new position.

The FXI is down 1.48 percent to $36.01 today. Earlier this month the exchange-traded fund had bumped up against resistance at $38 that has been in place since its March highs. Shares were down at support around $32 at the start of September.

Today's put selling is a bet that the FXI will hold above $32 through the expiration in more than a year. It is also a bet that the implied volatility of those puts, now at 30 percent, is too high. The current 30-day historical volatility of the stock is 20 percent and has been above 30 percent only briefly this year, in early July.
Share this article with your friends


OptionsHouse

Premium Services

Education & Strategy

Timing the Trade

Both break outs and a break downs need to have a couple things happen before it is considered a confirmed break out or break down by technical definition!  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.

View more education articles »