The iShares FTSE China 25 Index Fund has been on the rise from support, and one trader is betting on a floor beneath the stock.
The FXI is up 1.53 percent to trade at $35.10 on hopes that China's economy pick up strength. The exchange-traded fund was testing support around $32.50 through the end of May and the beginning of June, levels not seen since October. Shares had traded above $40 for most of February.
A trader sold 4,500 August 28 puts for the bid price of $0.23, according to optionMONSTER's systems. The volume topped the open interest of 3,253, so this is a new position.
Traders sell puts as a bet that the underlying will remain above the strike price of the options. It allows the trader to collect the premium from volatility but also to buy the stock on a pullback below the strike level. (See our Education section)
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