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Cap seen on emerging-markets fund

Chris McKhann (chris.mckhann@optionmonster.com)

The iShares Emerging Markets Fund has been struggling with an attempted comeback, and one large trader continues to see limited upside.

optionMONSTER systems show that 222,732 December 44 calls were bought for $0.28 against previous open interest of 257,652 on Friday. Seconds later, 217,732 December 41 calls were sold for for $0.80 in volume far above open interest of 9,106 at that strike, so this is a new position.

It appears that the trader is rolling a short-call position to a lower strike price as the EEM continues to give up ground. The trader is able to close out the higher-strike calls, presumably for a gain, and still have a position that can profit if the EEM remains below $41 by mid-December. This may well have been done in conjunction with long shares in a covered-call strategy . (See our Education section)

The EEM finished Friday at $37.34, down 0.64 percent on the session. The exchange-traded fund has been trying to rebound since falling from above $44 in early May, but it pulled back again last week.

More than 1.1 million EEM options traded on the day, about three times the daily average. 

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