OptionsHouse

Options Trading News

October 5, 2012  Fri 2:14 AM CT

EWA: SEE CHART GET CHAIN FIND STRATEGIES
One investor thinks that Australian stocks are going to break out or break down.

optionMONSTER's monitoring systems detected the purchase of about 10,000 January 22 puts for $0.62 and 10,000 January 25 calls on the iShares MSCI Australia Index exchange-traded fund for $0.50. Volume exceeded open interest at both strikes, indicating that a new position was initiated.

Known as a strangle, the trade cost $1.12 and will profit from the EWA making a sharp move higher or lower. It will lose money from the fund remaining trapped in a range. (See our Education section)

The EWA rose 0.11 percent to $24.03 yesterday and has spent almost two months trapped at around $24. That level has been resistance going back more than a year, which could be leading some chart watchers to expect a powerful rally if it's broken.

The fund was a favorite among global investors last decade as China snapped up its mineral exports. It has lagged the S&P 500 more recently as growth slows on the mainland.

Policymakers have attempted to increase domestic demand, particularly in its residential housing market, to offset weak demand from abroad. Earlier in the week, for instance, the Reserve Bank of Australia unexpectedly cut interest rates, and now some investors expect further stimulus next month.

Overall option volume in the EWA was 20 times greater than average in the session.
Share this article with your friends


OptionsHouse

TRADING WEEKLY OPTIONS

The fastest money in the market
View full report »

Premium Services

Upcoming Webinar:

Using Options For Income

http://bit.ly/1nY1OKA

Jon Najarian and Adam Mesh of Options Wealth Machine discuss a detailed strategy utilizing credit spreads to generate income, and how any level of trader can use this simple trading technique.

Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

View more education articles »