Market News

January 31, 2013  Thu 3:47 AM CT

A large trader is betting that the iShares Brazil Fund will hold current levels.

A trader sold 17,700 June 56 puts for the bid price of $2.51 yesterday, according to optionMONSTER systems. That volume was more than 3 times the open interest at the start of the session, clearly showing that this is a new position.

The put selling is a bet that the EWZ will remain above $56 through expiration in mid-June. The trader collects the $2.51 risk premium in exchange for the potential of having to buy shares if they are below the strike price. (See our Education section)

The EWZ, which tested support at $51 in November, fell 1.1 percent to $56.57 yesterday. The exchange-traded fund has been in a tight range so far this year, with a 10-day historical volatility below 10 percent. The implied volatility of those puts is 20 percent.

More than 44,000 EWZ options changed hands yesterday, compared to a daily average of 33,000.
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