The iShares MSCI Turkey Fund plunged on Friday, handing significant profits to bearish options traders.

In the previous month, Investitute's proprietary programs identified two bearish trades in the same contracts within a week:

-On July 12: 2,428 January 26 puts were bought for $2.85 above open interest of 50 contracts with shares at $26.40.
-On July 17: 6,000 January 26 puts were purchased for $2.40 to $2.45 above open interest of 2,458 contracts with shares at $27.40.

These investors may have been hedging a basket of assets with exposure to the Turkish market or making an outright bet that the Turkish economy, AND currency, would see a capitulation event in the relatively near term future, driving shares of TUR lower. Either way, the perceived need to hedge, or an outright downside bet is generally believed to be a bearish sign.

Those January $26 puts traded up to $7.10 on Friday morning, about three times their most recently-dated purchase prices. The stock fell 27.66% in the same period, a significant move but nowhere near that of its options.

Long puts lock in the price where a stock can be sold no matter how far it might drop, gaining value in a selloff with the potential for significant leverage. The contracts can be purchased either as an outright bearish bet or a hedge on a long-stock position.

The iShares MSCI Turkey Fund dropped 14.53% on Friday, August 10, to close at $21.42. The exchange-traded fund fell sharply with the Turkish lira, pressuring markets worldwide.