Is Brazil Set to Rally? (EWZ)
Shares of the MSCI BrazilIndex Fund (NYSE: EWZ) are trading lower on the session by 0.72%, at $53.77.The index recently topped out at $55.90 and has been retracing since; sharesare now testing the 50-day moving average.
One institutional traderseems to be betting that shares find support here, as upside calls are activeon the EWZ. A short while ago, the September $57 call was purchased 10,000 times,on the offer, for $0.36. Open interest on the strike is 42,451 contracts.
This trade would be in directconflict with one other institutional trade seen over the past few months. Backin May, the September $46/51 2x1 ratio spread traded 6,000x3,000 times for$0.69. The $51 puts were purchased, while the $46 puts were sold. The player isstill holding the position in open interest.
Both implied and historical volatility is registering 24%, downfrom 33% and 27% back in June. At $0.36, the Sept $57 call traded at 32.4% vol.
The MSCI Brazil Index Fund seeksinvestment results that correspond generally to the price and yield performancebefore fees and expenses of the MSCI Brazil Index. The fund generally investsat least 95% of its assets in the securities of the underlying index and indepositary receipts (DRs) representing securities in the underlying index.
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