OptionsHouse

Options Trading News

January 14, 2014  Tue 4:31 AM CT

EWJ: SEE CHART GET CHAIN FIND STRATEGIES
A large trader is combining stock and options in looking for a big move higher or lower in the iShares Japan Fund.

optionMONSTER's Depth Charge system detected the purchase of 15,000 February 12 puts for the ask price of $0.22 yesterday. The volume far eclipsed the strike's previous open interest of 3,526 contracts, clearly indicating that this is a new position.  

Less than a minute later, the largest block of EWJ shares traded with 705,000 bought for $12.0413. Combined with the puts, this creates an overall delta-neutral position that would profit from a sharp move in either direction and/or for volatility to be higher than that implied by the options. (See our Education section)

The EWJ finished the day at $12 even, down fractionally on the session. The exchange-traded fund is in the middle of an increasingly tight range.

Its 20-day historical volatility is down to 13.6 percent, near the lowest levels of the last year. The implied volatility of those puts was just above that.
Share this article with your friends


OptionsHouse

Premium Services

Education & Strategy

The Problem with Trading Earnings

AP Options specializes in Swing Trading. Swing trading is the art of locating short term, quick, aggressive movements in a stock normally created by the technicals but, can be sometimes created by the fundamentals. These trades, at least in this service, last a couple of days to a week in the majority of cases.

View more education articles »