Investors haven't shown much love for emerging markets lately. But one big trader just bet $8 million that it will get even worse for the iShares MSCI Emerging Markets ETF (EEM).
One of the largest option trades placed on Monday was the massive purchase of the December EEM 35/27 put spread for 78 cents. The spread traded 104,000 times, and it is an $8.1 million bet that the EEM will be below $34.22 at December expiration.
This spread will realize its full value of $8.00 if EEM is below $27 at expiration, which would amount to a tidy $75 million profit for this trader.
The ETF is already down about 14 percent this year, but rising rates in the U.S. mean that there could be the potential for more downside ahead, despite seemingly attractive valuations.