Global fund draws crash insurance

optionMONSTER

A trader appears to be looking for protection against a crash in the global iShares MSCI EAFE Fund.

optionMONSTER's Depth Charge system detected the purchase of 5,000 December 36 puts in one block for $0.0, the ask price at the time. This is a new position, as there was no open interest at that strike before the trade appeared.

These puts are 42 percent out of the money and have a delta of just 0.01. This suggests that there is just a 1 percent probability that they will be in the money at expiration.

Given this profile, the trade is very likely a cheap way to protect against a crash in the EFA, which tracks stock indexes in Europe, Asia, and Australia. As with any insurance policy, the buyer really doesn't want this position to pay off, but it is unusual to see put buying that far out of the money. (See our Education section)

The EFA is up 0.35 percent to $61.79. The exchange-traded fund was at a high around $63 in May and then bounced off support at $57 in late June.


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