This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Emerging Market Jitters

TheStreet Premium Services

A complimentary preview
of Options-Profits Previews

Although stock market averages rebounded and finished with modest gains, option flow indicates that the underlying sentiment among some institutional investors in the options market remained cautious on Monday. 4.6 million puts and 3 million calls traded on the S&P 500 Trust (SPY), PowerShares QQQ (QQQ) and other exchange-traded funds, including some big prints in two of the international ETFs.

One of the biggest options blocks of 2013 was seen midday Monday when 225,690 August 39 puts traded on iShares MSCI Emerging Markets Index ETF (EEM) for $0.75 per contract. With shares near $41.60, the same investor also sold 94,000 July 42 puts on the fund and 131,646 August 42 puts. Looking at trade history and open interest, the activity was apparently a roll. That is, the investor held hefty positions in July and August 42 puts and, after a 7-day 5% drop in EEM, is now rolling from in-the-money puts to out-of-the-money August 39 puts.

A hefty put spread in the iShares EAFE Fund (EFA) traded Monday as well after an investor sold the July 60 - August 58 put spread on the ETF at $0.45 cents (sold July and bought August). Today's open interest also indicate rolling activity, as the investor was closing out July to open a new large positoin in August downside puts. EFA was trading around $60.20 per share.

The big blocks of puts in EFA and EEM are probably hedges. That is, investors with exposure to global equity markets are probably buying August downside puts to help protect their portfolios. Still, given the size of the trades (about$1.7 billion in notional value), the activity is noteworthy. It indicates that some "smart money" in the options market is growing increasingly concerned about the short-term outlook for global equity markets heading into the sometimes volatile summer months. I'll use this general cue to hunt for the best risk/reward trade setups we can find to place some conservative hedges at the best possible cost.

OptionsProfits can be followed on Twitter at

EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

At the time of publication, Schiller was long XXX, although holdings can change at any time.

Dr. Harry Schiller is a Registered Investment Advisor with the California Dept. of Corporations. He holds a Series 7 General Securities license as well as a Series 4 Options Principal license. He has been owner and editor of the Short Term Consensus Hotline since 1988. For more information, see Under no circumstances does the information in this commentary represent a recommendation to buy or sell stocks. While he cannot provide investment advice or recommendations, he appreciates your feedback; click here to send him an email.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Real Money
Try it NOW

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Top Rated Stocks Top Rated Funds Top Rated ETFs