Put sale is looking for EEM levels to hold
Chris McKhann | firstname.lastname@example.org
The EEM is off the morning low of $39.87 but is still down 1.42 percent to trade at $40.27 at its lowest levels since mid-January. The exchange-traded fund was just shy of $45 as recently as early March.
More than 162,000 options have traded so far today in the name, with puts outpacing calls by more than 4 to 1. optionMONSTER's systems show that the biggest EEM prints of the day is in put contracts.
An institutional trader sold 10,000 July 39 puts for the bid price of $1.76 and bought 10,000 July 35 puts for the ask of $0.73. The open interest at both strikes was around 3,100 contracts, so it is a new position.
The seller of this put credit spread takes in the credit of $1.03, which will be the profit if shares are anywhere above $39 at expiration. The risk is if the EEM is at or below $35 at that time, which would result in a loss of $2.97. (See our Education section)