Options News
$EEM bulls triple their money
Option traders are collecting exponential profits in the iShares MSCI Emerging Markets Fund. On Oct. 26, Investitute’s tracking systems detected the purchase of 131,000 November $39.50 calls for $0.60 to $0.62 as part of a bullish spread with shares at $38.32. This was clearly a new position, as open interest in the strike was only […]
Option traders are collecting exponential profits in the iShares MSCI Emerging Markets Fund.
On Oct. 26, Investitute’s tracking systems detected the purchase of 131,000 November $39.50 calls for $0.60 to $0.62 as part of a bullish spread with shares at $38.32. This was clearly a new position, as open interest in the strike was only 1,950 contracts before the trade occurred. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”
Those calls sold for $1.80 today, 3 times their purchase prices. The stock rose 6.94% 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.
EEM was up 0.27% today to close at $40.93. The exchange-traded fund’s top holdings include several major Chinese companies, including Tencent, Alibaba, and China Mobile.