Skip to main content

Unusual Options Activity


Yesterday there was unusual options activity in FXI and EWJ. 40,000 FXI Oct. 30.5 puts were sold for $0.09 and separately 20,000 EWJ Jan. 10 calls were bought for $0.13. Selling an FXI put is a neutral to bullish strategy that profits if the ETF is above 30.41, 13.5% above yesterday’s close, at October expiration. The EWJ long call is a bullish strategy that profits if the ETF is above 10.13 at January expiration, a 8% move higher. The bullish tone of these trades is interesting given the predominately negative tone of news out of the region. Protests have sprung up across China as the Chinese rally against the Japanese purchase of an island the Chinese claim as their own. The protests have become severe enough that Japanese auto manufacturers have temporarily closed their plants in China. However, these large trades show that some traders do not expect this to hold back the Chinese and Japanese stock markets in the coming months and are gaining long exposure now.

Another large option trade yesterday was the purchase of 30,000 IWM Nov. 80 puts for $1.10. This is a bearish trade that profits if IWM is below 78.90 at November expiration. This is a 9.8% move from yesterday’s close. IWM made a new all-time high last week and is currently just 1.4% below that level. The trader buying these calls is likely long small-cap stock and is seeking protection from a market decline heading into the election.

Comments

Post a Comment

Popular posts from this blog

Is the KCJ Foreshadowing a 2008 Repeat?

The CBOE Correlation Index (KCJ) is close to the lowest level we have seen since it was first listed in 2007. The KCJ measures the implied movement of the S&P 500 components options, compared to the implied movement of the S&P 500 index options. Simply put, the higher the number, the more likely all stocks are going to move together. Conversely, a low number will be characterized by sector rotation, and flat markets; one sector moves higher, another moves lower.  (Source: Access Hollywood) Correlation, for lack of a better term, is correlated with volatility. Not surprisingly, 30-day S&P 500 historical volatility is near the low level of 6.5%. Currently at 33.5, KCJ is sitting close to rock bottom, lower than where it was in 2007, (but not lower than where Lindsay Lohan was in 2007).  So far this year, the market has been able to grind higher, characterized by leadership in FANG(Facebook Apple/Amazon, Netflix, Google) and sector rotation. A...
Post a Comment
Read more

Heading into Summer

With the dog days of summer almost upon us, it's time to start thinking about option strategies. Most of the time, the summer is when markets are calm. However, this may not necessarily be the case for options. Playing both sides, options give you an edge as you decide where you think the market may be. On Options Action, the panel had many interesting topics on their plates. As volatility continues the shrink, the fear in the market is slowly deteriorating. However, this may not mean a jump is coming. There is still a lot of uncertainty out there. Putting this all in prospective click below to hear all the newest option strategies. http://www.cnbc.com/id/15840232?video=1131628744&play=1 http://www.cnbc.com/id/15840232?video=1131630253&play=1 http://www.cnbc.com/id/15840232?video=1131628723&play=1 http://www.cnbc.com/id/15840232?video=1131628711&play=1
1 comment
Read more