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How bear is attacking Australia stocks

Australia is usually associated with commodities, and yesterday its stock market got slammed by a large put purchase.

The iShares MSCI Australia Index (EWA) exchange-traded fund, which has a heavy concentration in the country's banks and miners, experienced a surge of put buying about halfway through the session. Our Depth Charge tracking program detected the purchase of about 16,000 August 27 puts for $1.83 and the $1.88 against no existing open interest. The transactions accounted for almost all the activity in the fund.

The trades reflect concern that the EWA will fall into the mid-summer, potentially dropping below $27. It ended yesterday down 2.12 percent at $26.75.

The fund touched $28.33 last month, its highest price since June 2008. Since then it's been falling amid a series of headwinds, such as a collapse in precious metals, a rising U.S. dollar, and the danger that Chinese authorities will continue trying to slow their economy.

Overall option volume in the EWA was 12 times greater than average yesterday, with puts outnumbering calls by 92 to 1.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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