Options Trading News

January 17, 2013  Thu 11:13 AM CT

The iShares FTSE China 25 Fund has been running higher in recent months, and one large trader is apparently counting on those gains sticking.

A trader sold blocks of 5,500 and 4,500 April 41 puts for the bid price of $1.64, optionMONSTER systems show. That volume is far above the strike's open interest of 1,823 at the start of the day, so it is clearly new positioning.

The put selling is a bet that the FXI will hold at or above current levels, while the trader is also showing the willingness to buy shares if they are below the $41 strike price. In the latter case the effective buying price would be $39.36. (See our Education section)

The FXI is up 0.4 percent this morning to $41.38. The exchange-traded fund bounced off support at $32 in early November and hit a 52-week high of $41.97 on the first trading day of 2013.
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The art of trading

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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