One trader is betting big on Europe.
In a series of large trades that attracted a considerable amount of attention in the options pits, one trader bet over $2 million that the EWG, the ETF that tracks the German stock market, will rally 10 percent by April. Specifically, this trader bought nearly 60,000 April 30-strike EWG call contracts for about $30 each. Since buying a call option gives an investor the right to buy a stock or ETF at a set price within a set time, this wager is profitable if the EWG is above $30.35 or 10 percent higher by April expiration.
The bet was made just before European Central Bank President Mario Draghi unveiled a massive bond-buying program in hopes of stimulating Europe's moribund economy. Betting that central banks will boost local equities has been a widely successful trade over the past couple of years. Since the Fed announced its own stimulative measures in 2009, the S&P 500 has more than doubled. After the Bank of Japan announced a QE program in October 2011, the Nikkei has jumped 95 percent. Some traders appear to be betting that Europe's largest stock market may soon follow suit.