Bulls continue to rack up gains in $EWZ

Bullish option positions opened in the iShares MSCI Brazil ETF last month paid off handsomely today as shares snapped back higher.

On September 5, Investitute’s market scanners identified the purchase of 7,500 November $32 calls for $2.68 with shares at $31.14, as part of a bullish spread. Open interest in the strike was only 3,366 contracts before the trade occurred, showing that it was a new position.

Those calls traded for as much as $6.87 today, more than double their purchase price. The stock rose 23.28% in the same time period, illustrating how quickly options can far outperform moves in their underlying shares.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

EWZ was up 2.93% to close at $38.61% today. The exchange-traded fund, which tracks an index of Brazilian equities, resumed an uptrend today driven by hope for a favorable economic outcome to its presidential election, with the final runoff vote scheduled for October 28.