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June 26, 2012  Tue 12:11 PM CT

EEM: SEE CHART GET CHAIN FIND STRATEGIES
A four-way put spread dominates the options action in the iShares Emerging Market Fund.

The EEM trades at $37.30, up 0.57 percent on the day and not far from a long-term support level. The $37 level has held for all but a couple of closes going back to October, when the exchange-traded fund came off its 52-week low.

The big trade involved 18,500 each of the July 35 and 32 puts and the August 35 and 32 puts, all traded at the same time.

In the July expiration, the 35 puts traded for $0.37 and the 32s were bought for $0.09. The volume was much less than open interest at both.

In August the 35 puts were bought for $0.79 and the 32s sold for $0.30. Volume was below open interest in the 35s but above it in the 32s.

The trading data indicates that this is a roll of that 35/32 put spread to August from July. The trader ends up paying $0.21 for continued exposure down to that $32 level. (See our Education section)
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Options Academy: At the Break

So far, my articles have taken you through a logical progression of option theory and fundamental concepts of options. As of yet, I have not mentioned a single strategy and for a good reason! The actual application of a strategy should come AFTER you learn about the option product itself.

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