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How trader is playing emerging markets

Chris McKhann (chris.mckhann@optionmonster.com)

A call spread tops the action in the iShares Emerging Markets Fund as it continues to rebound.

optionMONSTER systems show that a trader bought 17,500 March 42.50 calls for the ask price of $0.97 in volume well above the strike's previous open interest of 5,256 contracts. At the same time, he or she sold 17,500 March 44.50 calls for $0.14 against open interest of more than 88,000.

The trader could be rolling a position lower, but we rarely see that kind of move to a strike that is in the money , especially when the underlying stock is rising. So it is more likely that this is a new bullish vertical spread that cost $0.83 to open, which is the most that can be lost. (See our Education section)

The EEM is up 0.77 percent to $43.27 this afternoon. That adds to yesterday's gains but still does not make up Monday's losses, when it was as high as $43.67. Shares traded at $45.22 on the first day of 2013. 

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