Bulls make quick gains in $EWY

Option traders have made quick returns on their money in bullish positions in the iShares MSCI South Korea ETF (EWY).

Just last Thursday on Jan. 9, Market Rebellion’s Unusial Activity scanners found that 5,000 January $62.50 calls were purchased for $0.47 to $0.48 with shares at $62.04. This was clearly fresh buying, as the open interest of 466 contracts paled in comparison to that trade’s volume.

Those calls sold for as much as $1.60 today, more than 3 times their purchase price. The stock rose 3.11% in the same time frame, underscoring how options can far outperform 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.

EWY was up 2.23% to close at $64.09 today. The exchange-traded fund, which tracks a basket of South Korean equities has risen sharply as global trade concerns have been tempered with a Phase 1 trade agreement scheduled to be signed between the U.S. and China on Wednesday.