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Sharp move seen in China fund

Chris McKhann (chris.mckhann@optionmonster.com)

A big trade is looking for a sharp move in shares of the iShares China Large-Cap Fund.

optionMONSTER systems show that 50,000 September 35.50 puts traded for $0.73 yesterday. This is a new position, as previous open interest in the strike was just 419 contracts.

Seconds later 1.45 million shares were purchased for $37.9528. Given the delta of the options, the overall trade is looking for a sharp move up or down in the FXI and/or for its volatility to be higher than that implied by the price of the puts. (See our Education section)

The FXI was down fractionally yesterday to close at $38.02. Friday's close was the exchange-traded fund's highest since the last day of 2013. It has been trending higher from support around $34.50 in the last five weeks.

More than 151,000 FXI options changed hands on the day, 3 times its daily average for the last month.

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