Heavy put activity tops today's action in the iShares Emerging Markets Fund as it trades fractionally higher.
The EEM is up 0.41 percent to $37.57 in midday trading. The exchange-traded fund is back near the support at $37, which it has closed below only three times this year during the lows in early June. Shares traded just shy of $45 at the start of March and have been losing ground since.
More than 113,000 EEM options have traded so far today, compared with its daily average of 87,000. Only 10,000 of those contracts are calls, as a huge three-way spread topped the action.
A trader sold 23,547 of the January 30 puts for $0.91 and bought the same number of January 25 puts for $0.33, with volume at both strikes less than open interest. At the same time, he or she bought 26,429 June 25 puts for $0.87 with no open interest at that strike.
Given the prices and trading activity, it seems very likely that a trader is closing a long put spread in January and rolling it to an outright put position in June. The option trader ends up with a greater delta, or sensitivity to changes in the stock price.
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