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What's behind put action in the EEM

Chris McKhann (chris.mckhann@optionmonster.com)

A large put trade tops today's option activity in the iShares Emerging Markets Fund as it makes up yesterday's losses.

optionMONSTER systems show that a trader sold 11,620 May 42 puts for the bid price of $0.96 against open interest of more than 46,000. At the same time he or she bought 11,620 May 41 puts for the ask price of $0.66 in volume that was twice the open interest at that strike and therefore a new position.

This could be a new put credit spread , looking for the EEM to hold above $42, but it is more likely a trader rolling a long-put position down a strike to take some money off the table while maintaining some downside exposure. That would be consistent with a hedging program.
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The EEM is up 0.74 percent this morning to $42.30, back above Monday's close. Shares were above $44 two weeks ago, while yesterday's low under $42 was the worst level since the start of December.

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