Greek Tragedy and A Way to Play With a 4 to 1 Payout in EEM

by Dan June 23, 2011 10:02 am • Commentary

Greek Parliament is expected to vote on the 28billion euro austerity plan on Tuesday, which includes a new 6.4 billion euros of cutbacks for 2011……a separate vote on the implementing legislation is expected by Thursday.  This will not come without a fight that will likely be played out in smoky backrooms and in the street and I think we will have continued downside volatility. 

I want to use EEM to express a short term bearish view as I am looking for other broad indices outside of SPX (I am long June weekly Puts in SPY).  EEM looks like it wants to test 44 and if it breaks the trade structure below should perform very well.

[caption id="attachment_2903" align="aligncenter" width="300" caption="1 Yr EEM chart Provided by Bloomberg"][/caption]

QUICK TRADE:  EEM $44.90 BUY July1 Weekly 44/43 Put Spread for .22

-Buy 1 July1 (weekly) 44 Put for .42

-Sell 1 July1 (weekly) 43 Put at .20

Break-Even On July1 Weekly Expiration:


-stock btwn 44 and 43.78 lose up to .22,

-stock above 44 lose all .22

Stock btwn 43.78 and 43 make .78

Stock below 43 make full .78