Traders looking for Russian rally
Conflict with Ukraine and economic sanctions have weighed on Russian stocks, but the bulls are back today.
optionMONSTER's Heat Seeker monitoring program detected the purchase of more than 19,000 January 26 calls in the Market Vectors Russia exchange-traded fund for $1 to $1.05. That dwarfed previous open interest of 1,362 contracts, which indicates new money was put to work.
These long calls lock in the price where investors can buy the fund, whose big holdings include Lukoil, Gazprom, and Sberbank Russia. This allows traders to play for upside with limited risk and earn significant leverage if a rally ensues, but the contracts will lose value if shares sell off.
RSX is down 0.71 percent to $25.16 in afternoon trading, fighting back from a 1.7 percent drop earlier in the session. It's been shuffling between $23 and $25 since mid-July but could gain if the cease-fire lasts between pro-Russian rebels in Ukraine and Kiev.
Bullish trades also appeared in e-commerce stock Yandex around the same time. It focused on the October 34 calls and the September 32 calls. (See related story on YNDX, which operates in countries like Russia, Turkey, and Ukraine.)
Total option volume in RSX is twice the daily average, with calls outnumbering puts by a bullish 6-to-1 ratio.
Disclosure: I own YNDX shares.
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