Three-way play is bullish on China


A large bullish trade in the iShares China 25 Fund is looking for today's bounce to continue.

More than 107,000 FXI options have already changed hands this morning, about 3 times its daily average in the last month. Almost all of the action is in a three-way combination trade.

optionMONSTER systems show that a trader bought 30,000 September 35.50 calls for their ask price of $0.91 and sold 30,000 September 38.50 calls for $0.27. At the same time, he or she traded 30,000 September 29.50 puts for $0.27. Volume was far above the previous open interest in each strike, indicating new activity.

This combination spends just $0.19 to get upside exposure, at least up to $38.50. The trader is taking on the risk of having to buy shares if they are below $29.50 by that expiration. (See our Education section)

The FXI is up 2.25 percent to $34.74. Shares of the exchange-traded fund closed Friday at their lowest level since September. They were as high as $42 in the start of February.

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