Big Printin’ – $ASHR, $ITB, $IYR

by Dan March 21, 2016 4:03 pm • Commentary


The Shanghai Composite has staged a bit of a stealth rally, despite continued weak economic data, closing last night at a two month high, above the nice round number of 3000, up about 15% in the last month:

ASHR 1yr chart from Bloomberg
ASHR 1yr chart from Bloomberg

Today there was a decent size bullish roll in options of the etf ASHR (Deutsche X-trackers Harvest CSI 300 China A-Shares ETF).  When the ASHR was $25 a trader sold to close 20,000 of April 23.90 calls at $1.44 and bought to open 30,000 of the April 25.50 calls for 64 cents to open.  These calls now break-even at $26.14 up 4.5% from the trading level.

Despite the Shanghai’s recent bounce, it is still down 15% on the year, and down 40% from its 52 week highs made last June.


This morning, Existing Home Sales for the U.S. in February came in below estimates, falling 7% year over year, below the estimate of a 3% decline. There were a couple trades in housing related etfs that caught my eye.

IYR, when the iShares US Real Estate etf was $76.70, a buyer paid $1.30 for 12,000 of the June 74 / 66 put spreads.  The same put spread was bought on Thursday March 17th, 12,000 for $1.19 to open.

ITB, when the iShares Home Construction etf was $26.57, 51,000 of the Jan 2018 35 calls traded for $1.24. Here is a great example where it is nearly impossible without intimate knowledge of the trade knowing whether or not the they were bought or sold.  The market on the strike was .80 at 1.45, so the mid point is $1.125, so the options traded 10 cents above mid, suggesting they were bought.  With the etf now down 7 cents as I write, the market on this strike is .95 at 1.20 below the trading price.  So they were likely bought, but I am not sure who on earth would want to sit with this more than $6 million block of premium that doesn’t not break-even until $36.24, up 36%. I guess when you back out the chart of the ITB to 2006 it would appear there is plenty of room overhead, and possibly leveraging up a long position:

ITB 10yr chart from Bloomberg
ITB 10yr chart from Bloomberg