Emerging-market stocks have been pushing against a major resistance level, and one investor is using options to profit from the passage of time.
Our tracking programs detected the sale of 11,250 September 53 calls for $0.64 on the iShares MSCI Emerging Markets Index ( EEM ) exchange-traded fund. An equal number of 11,250 September 54 calls were also sold for $0.47, and volume was more than 4 times open interest in both strikes.
A block of 22,500 June 55 calls was purchased at the same time for $0.08 and $0.09, though volume in those contracts was below open interest. The trades probably resulted from an investor rolling a short position in the June calls to the September expiration, letting him or her collect a net payment of about $1.06 million.
The EEM is up 0.35 percent to $45.56 in morning trading and has been pushing against the $48 level for more than three months. That's about the same price area where it traded in June 2008 immediately before it gapped below it 200-day moving average and began a huge push to the downside.
Other stocks have struggled against similar levels on their respective price charts.
Today's seller probably owns about 2 million shares in the fund and has been writing the options as part of a covered call strategy. (See our Education section)
(Chart courtesy of tradeMONSTER)
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