Options Trading News

October 25, 2013  Fri 3:16 AM CT

A large trader is looking for the WisdomTree Japan Hedged Equity Fund to stay trapped in a range.

optionMONSTER systems show that 10,000 December 52 calls were sold for the bid price of $0.25. The previous open interest was just 5 contracts, so this is a new position.

A few minutes later a block 135,000 DXJ shares was bought for $47.74. The combination of stock and short calls creates an overall strategy that is looking for lower volatility than that implied by the options and/or for shares to remain range-bound. (See our Education section)

The DXJ was up 0.78 percent yesterday to close at $47.52, in the middle of its recent range. The exchange-traded fund has seen resistance around $49 going back to May as it came off highs near $54.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. 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.

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