Italian shares have been trying to bottom for the last two years, and one big investor thinks a rally is coming.
optionMONSTER's Heat Seeker monitoring system detected the purchase of 3,250 March 15 calls in the iShares MSCI Italy exchange-traded fund for $0.32. Some 4,500 December 15 calls were sold at the same time for $0.125 against previous open interest, which suggests an existing position was closed and rolled forward in time.
Long calls lock in the price where shares can be purchased in the fund, letting investors cheaply position for upside. Today's transaction cost $47,750 and gives the investor an additional three months for a rally to unfold. (See our Education section)
The EWI is unchanged at $13.28 in morning trading but is up 14 percent in the last year. It fell hard in 2011 amid worries about public-sector debts, hit a 20-year low in August 2012, and has been working higher since. It's now trying to find support above its 200-day moving average, which some chart watchers could view as a bullish pattern.
Total option volume in the fund is 16 times greater than average so far today, according to Heat Seeker. Calls outnumber puts by more than 200 to 1.
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