Bulls make quick gains in $EFA

Option traders have made quick returns on their money in bullish positions in the global iShares MSCI EAFE Fund.

On Mar. 7, Investitute’s market scanners found that 54,000 Weekly $64.50 calls expiring on March 22 were purchased for $0.26 to $0.29 with shares at $63.65. This was clearly fresh buying, as the open interest of 4,485 contracts paled in comparison to that trade’s volume.

Those 22March 64.50 calls sold for as much as $1.42 yesterday, more than 4 times their purchase price. The stock rose 3.49% 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.

EFA was up 0.05% to close at $65.61 today, almost unchanged from yesterday during a volatile session. The exchange-traded fund, which tracks developed markets outside of the United States and Canada and has Nestle SA as a top holding, has continued its rally since the end of last year with the global recovery.