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Options bulls have been targeting EEM as the ETF hovers near multi-year highs
Exchange-traded funds (ETFs) popularity continues to ascend. At the start of 2024, ETFs had $11.1 trillion in assets under management (AUM), and a cumulative annualized growth rate (CAGR) of 19.8% since 2008. And to start the year:
“Investors pumped $65.6 billion into active ETFs in the three months to the end of March — more than 50% higher than the previous record of $41 billion in the fourth quarter of 2023.”
-The Financial Times, April 11, 2024
Amidst this popularity, we want to start highlighting ETFs that are experiencing unusual options activity throughout the week. First up is iShares MSCI Emerging Markets ETF (EEM)which offers exposure to large- and mid-sized companies in China, South Korea, and Taiwan.
EEM is up 7.7% in 2024 and 10.6% in the last 12 months. Last seen at $43.33, the ETF is a chip shot from its July 12 two-year high of $44.64. EEM’s 200-day moving average — which has only been breached once on a closing basis since early February — contained pullbacks in April and August.
Yesterday, 124,000 calls changed hands, volume that’s double the average intraday amount and nearly quadruple the number of puts traded. It seems a 55,050 block of January 2025 44-strike calls and June 2025 45-strike calls were the bulk of this activity, with new positions being bought to open at the latter. Today, the September 45 call is the most popular.
EEM call buying has been the dominant trend. For example, more than five times as many calls have been purchased for every put during the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This 10-day call/put volume ratio sits in the 100th percentile of its annual range, indicating that such a skew is rare in the last year.