The iShares MSCI South Korea Index Fund is holding its gains in today's market pullback, but a complex put spread leads the option trading in the name.
The EWY is up 0.34 percent to trade at $53.55. The exchange-traded fund bounced off support at $51 a week ago, its lowest levels since mid-December, but traded up at $60 just a month ago.
More than 9,000 EWY options have traded, about twice the daily average. Almost all of that volume was in a three-way put spread, according to optionMONSTER's Depth Charge system.
A trader bought 2,000 each of the January 42 and 25 puts for $1.90 and $0.20 respectively while selling 4,000 January 31 puts for $0.45. The volume at all three strikes was more than open interest, so this was a new position.
The spread is not evenly spaced, so it is known as a "broken wing" put butterfly. The trade can profit with shares anywhere below about $40.48 at expiration, though the maximum profit comes with the EWY at $31 at that time. (See our Education section)
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