Trade sees China stocks settling down

optionMONSTER

A large trader is looking for lower volatility in the iShares China 25 Fund.

optionMONSTER systems show that a block of 20,000 FXI August 31.50 puts traded for $1.43 on a penny-wide spread. The previous open interest was 747 contracts, so this is a new position.

About a minute later, the largest block of FXI stock traded when a print of 940,000 shares was sold for $31.5913. The combination of the stock sale and the short puts creates a delta-neutral play that will profit from lower volatility than that implied by the options. (See our Education section)

The FXI rose 1.93 percent to finish the session at $31.70 after hitting a new 52-week intraday low. Shares were at a 52-week high of $41.97 on the first days of 2013 and were above $38 a month ago. The implied volatility of the FXI options is up to 34 percent, double where it was a month ago.


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