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Options Boil on This Brazil ETF

Thursday, 7 May 2009 | 9:56 AM ET

Options traders were snapping up calls in the EWZ Brazil exchange traded fund yesterday (Wednesday), with a particular focus on the June contracts.

Much of the buying activity yesterday was concentrated on the June 52 and June 54 calls, where more than 21,000 and 22,000 contracts traded respectively, according to OptionMonster's tracking programs. The volume was several times open interest at both strikes, where average call turnover was a combined total of just 515 for those contracts.

The assets in the EWZ, formally known as the iShares MSCI Brazil Index, are focused mostly on three sectors—industrial materials, energy, and financials. The call buying indicates that traders expect the shares to rise by the time the contracts expire in the middle of June.

The ETF closed yesterday up 2.68 percent to $50.56 but pulled back slightly in after-hours trading. The shares are up more than 60 percent since the beginning of March, when they were trading near $31.

Disclosure:

Najarian has an EWZ call spread.

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Options Education:

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Major Nations ETFs:

MSCI Emerging Markets

iShares FTSE/Xinhua China 25 Index

iShares MSCI Japan Index

iShares MSCI Taiwan Index

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Pete Najarian is a professional investor, CNBC contributor, regular co-host of CNBC's "Fast Money" and co-founder of OptionMonster.com.

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