The iShares Emerging Markets Fund is seeing huge put action today, giving it the third-largest option volume on the market in the session so far.
The EEM is down 1.3 percent this morning to $38.66. The exchange-traded fund is in the middle of its recent range and maintains a very high correlation with the S&P 500, as its 10-day reading is at 0.9.
More than 240,000 EEM options have already changed hands, about twice its daily average. optionMONSTER's systems show that most of the action is in a put diagonal spread.
The trade involved more than 80,000 each of the July 39 puts and August 38 puts, with two big blocks of 35,658 in the July contracts traded for $0.40 and then $0.39 against open interest of 93,987. Seconds later a block of 84,000 of the August puts was bought for $0.80.
With July options expiring at the end of today's session, the trader is rolling the put position from July to August. These puts may be an outright bearish position or hedging against shares of EEM or its underlying stocks.
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