Malaysia has had one of the strongest stock markets in the last year, and one investor is apparently confident that it will hold its ground.
optionMONSTER's tracking systems detected the sale of 6,000 September 14 puts in the iShares MSCI Malaysia Index fund for $0.30 Volume was more than 40 times open interest in the strike.
The trade reflects a belief that the fund will maintain current levels in the next five weeks. If the EWM closes below $14 at expiration, the investor will be forced to buy it at that level. But given the credit earned, their effective entry price would be $13.70.
The EWM rose 1.60 percent to $14.57 yesterday and is up 19 percent in the last year. In contrast, the S&P 500 has risen 12 percent over the same period while most other major international indexes have advanced less than 10 percent.
Selling puts is a common strategy when investors like a stock but don't want to commit capital to buying shares. Even if the EWM falls slightly, the traders stand to profit from the simple passage of time erasing the value of the contracts sold short. (See our Education section)
The trade pushed overall option volume in EWM to more than 20 times greater than average.
Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.