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Options Trade Bullish on Hong Kong ETF

This post was written by OptionMonster's Chris McKhann.

A key Hong Kong exchange traded fund remains more than 50 percent below its May highs, but at least one trader is bullish on the next four months.

The iShares MSCI Hong Kong Index (EWH) is down 1.83 percent at midday, trading at $9.67 and nearing its technical support level at the $9.40 area. That level has been in place since the stock bounced off its low of $8.36 in late November.

The trade detected by OptionMonster's tracking systems is the buying of the June 10 calls, where more than 35,000 contracts have changed hands. This includes the largest trade of the day so far — 23,000 contracts in one block for $0.90. The open interest at this strike is 27,659, and the 20-day average volume for all EWH options is just 713 contracts.

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The call buying is clearly bullish and would be profitable if the ETF is above $10.90 at expiration, a level last seen at the beginning of this year. Of course, most options buyers sell their long contracts well before expiration, to profit from whatever time value remains.

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More Nations/Exchanges ETFs:

iShares MSCI Emerging Markets Index

iShares MSCI Brazil Index

iShares MSCI Japan Index

iPath MSCI India Index ETN

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Jon 'DRJ' Najarian is a professional investor, CNBC contributor, and cofounder of OptionMonster.com.

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Disclaimer