More pain for emerging markets?
David Russell | [email protected]
optionMONSTER's Depth Charge monitoring program detected the purchase of some 87,000 March 35 puts in the iShares MSCI Emerging Markets exchange-traded fund, most of which priced for $0.33 and $0.34. Volume was more than 7 times open interest at the strike, indicating that new money was put to work.
Puts lock in the price where the EEM can be sold, so they move in the opposite direction as the stock price. They also can generate significant leverage if the fund continues to drop through the rest of the winter. (See our Education section)
The EEM is down 1.02 percent to $39.38 today and has lost more than 5 percent of its value in the last three months. The S&P 500, in contrast, has climbed 11 percent in the same period.
The fund has been hurt by weakness in its largest holding, Samsung Electronics, along with poor economic numbers in China and Brazil. It hasn't seen $35 since late 2011, so today's trader definitely has a bleak outlook for the EEM.
Total option volume is still slightly below average in the name, with puts outnumbering calls by a bearish 4-to-1 ratio.