Europe bulls look for more gains

David Russell (
June 9, 2014

European equities have climbed back to long-term highs, and the bulls are looking for more.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 7,500 December 58 calls on the Vanguard FTSE Europe exchange-traded fund for $4.15. Some 9,000 June 58 calls were sold at the same time for $3.48, but volume was below open interest in those.

It appears that the investor came into the session long the June contracts and rolled the position forward in time, keeping him or her in the trade for an additional six months. It cost nothing to make the adjustment because they reduced the number of contracts. The  long calls will also closely track movements in the underlying because they're in the money . (See our Education section)

VGK is down 0.21 percent to $61.59 in afternoon trading. The fund has spent most of this year around the same $60 area where it traded in August 2008 immediately before plunging along with the S&P 500, and it is now showing signs of breaking that resistance level. The fund holds blue-chip European names like Nestle, Roche, and Novartis.

Equities in the region got a boost last week after the European Central Bank cut interest rates to record lows. Some economic reports have weakened recently, though German exports surged on Friday and the Bundesbank raised its growth forecast for the country.

VGK usually trades just 350 options per session, which makes it very illiquid. But today's volume is 48 times that amount, with calls outnumbering puts by more than 600 to 1.

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