Huge put trade takes aim at global fund

Mike Yamamoto (mike.yamamoto@optionmonster.com)

A huge put trade tops today's option volume in the global iShares MSCI EAFE Fund.

More than 265,000 EFA options have traded, compared to a daily average of 44,000 over the last month. The exchange-traded fund tracks stock indexes in Europe, Asia, and Australia.

optionMONSTER systems show that the action is dominated by a large put strategy. A trader bought 129,773 April 57 puts for the ask price of $0.31 against open interest of 191,000. At the same time, he or she sold 131,421 June 57 puts for $0.96 in volume that was 13 times the open interest at that strike, indicating that it is a new position.

This could be a short calendar spread designed to profit from a big move up or down. But it is far more likely that this trader is rolling the April short puts to the June expiration, which has a higher premium but also has higher implied volatility . (See our Education section)

The EFA is down 0.44 percent to $59.30 after peaking at $59.60 earlier in the morning, its highest price since August 2011. Shares have been trending higher since early June, when it was below $47.


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