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Options Activity Shows Investors Hedging Emerging Market Positions

Monday, November 7, 2016 11:41
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money and investingAnalyst Paul Weisbruch analyzes some unusual money flows in the ETF markets today, which includes huge outflows from U.S. equities, some hedging in emerging markets, and big dip-buyers in energy.

We continue to see lower and lower strikes in near term November puts trade in the marketplace in SPY, as we most recently saw the 195 strikes trade in notable size. This comes after reporting here that we have seen action in the 208, 205, and 200 strikes previously. Those traders dabbling in 195 strikes are undoubtedly disappointed with equities’ huge rally today, with the SPY jumping 2% to $212.73 in afternoon trading.

Likewise, there was continued interest in EEM (iShares MSCI Emerging Markets) protection via downside puts going out to December to end the week, but Emerging Markets are one of the best performing segments of the market today, up more than 3.3%.


Elsewhere, the recent inflows into SPY have quickly reversed to outflows, with about $2.5 billion leaving the fund via redemptions, and this is prior to today’s significant leg up in equities globally.

In the energy sector, there have been obvious bottom fishers in Crude Oil linked long products USO (U.S. Oil) and the bull levered UWTI (VelocityShares 3X Long Crude Oil ETN) via creation activity. Oil is bouncing this morning on news of a renewed push by OPEC to get a production pact completed.

Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch
paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.

Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.

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