Call seller targets Europe-Asia fund


The iShares MSCI EAFE Index Fund is up again today as it tries to fill a gap from early August, but traders are calling a top in the stock.

The EFA, which covers Europe and Asia, is up 0.42 percent this morning to trade at $55.61. It has climbed off support at $26 in the last three months and is on pace for its highest close since Aug. 3. It collapsed at that time from above $60 on Aug. 4, opening up a gap that has yet to be filled.

Today's option volume is light, but we do see one unusual play. A trader sold 5,000 September 62 calls for the bid price of $0.89. The previous open interest had been just 508 contracts, so this is a new position.

The calls may have been sold naked, as they are reasonably far out of the money and done in an index fund, which is less likely to gap higher. This would also be a way for traders to take advantage of relatively high implied volatilities without being exposed to downside " fat tail " risks. (See our Education section)

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