Spread sees floor under Brazil fund

The iShares MSCI Brazil Index Fund is giving up some of the ground that it made up yesterday, but one trader is positioning for limited downside.

The EWZ is trading at $53.89, down 1.12 percent. The exchange-traded fund was above $70 in early March but tested long-term support around $50.50 for much of the last month.

More than 92,000 EWZ options have changed hands, about twice its daily average. Most of that volume traded within just one minute with more than 21,000 each of the July 60 calls and the July 60 and 51 puts.

The action at the July 60 strike was all less than open interest with the calls trading for $0.05 and the puts for $6.95. The July 51 puts went off in a block of 22,000 for the bid of $1.04. The action at the 51.50 and 51 puts was less than open interest as well.

The trading is a muddle, but it does appear that the trader comes out of the action short those 51 puts. They may be traded against other options in this mix, but the trader is apparently setting a floor on the EWZ at that $51 price level. (See our Education section)

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