Options Trading News

December 24, 2012  Mon 3:47 AM CT

A huge put trade is targeting the iShares EAFE Index Fund even as it trades at its highest levels in more than a year.

optionMONSTER systems show that 22,100 June 48 puts were bought for the ask price of $1 in volume that was well above the strike's previous open interest of 4,088 contracts. At the same time the trader sold 22,100 June 40 puts for the bid price of $0.22 against open interest of 42,969, so that could have been an opening or closing transaction.

If it was an opening trade, this is a new vertical spread that is looking for the EFA to fall to $40 or below by expiration in mid-June. If it was a closing transaction, the trader is rolling the put position to a higher strike as the stock continues to rise.

The EFA ended the week at $56.51, down 0.62 percent on the day, but saw its highest close since August 2011 in the previous session. Shares of the exchange-traded fund, which tracks stock markets in Europe, Asia, and Australia, have been on the rise since the start of June when they traded below $47.
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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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