There has been big option volume recently, mainly in the puts which are probably positioning for protection. The put/call ratio has gone from .96 to 1.12 from 8/3 to 8/13 (schaeffersresearch). Here are volume blocks I caught on FXI puts. Not sure of the exact DNA structure but looks like risk management. Below Interactive Brokers and OptionMonster explained some of the trades in detail.
FXI September 38 Put (OptionsXpress)
FXI January 35 Put (OptionsXpress)
Interactive Brokers and OptionMonster on the trades:
FXI Sep 41 Puts, 44 Calls - 8/14 (Forbes)
FXI Sep 50 Puts and Calls - 8/10 (Forbes)
FXI Sep 50 Synthetic Position, Arbitrage (OptionMonsterTV)
FXI Sep 38 Puts - 8/5 (Fxstreet)
Options see downside in China ETF 8/5 (OptionMonster)
FXI Nov 35 Puts, 50 Calls - 7/28 (Forbes)
FXI Puts and Calls, mixed - 7/23 (Forbes)
Andy Xie, an independent economist based in Shanghai, thinks China is overvalued.
"Chinese stock and property markets have bubbled up again. It was fueled by bank lending and inflation fear. I think that Chinese stocks and properties are 50-100% overvalued. The odds are that both will adjust in the fourth quarter. However, both might flare up again sometime next year. Fluctuating within a long bubble could be the dominant trend for the foreseeable future. The bursting will happen when the US dollar becomes strong again. The catalyst could be serious inflation that forces the Fed to raise interest rate." (my1510.cn)
Andy Xie: China Counts Down to the Next Bubble Burst (Caijing.com)
China to Cut Loans as Stocks ‘Bubble’ Grows, Xie Says (Bloomberg Article, Video Interview)
Related posts:
Charts: Copper, BHP, Shanghai Index and Baltic Dry Index (8/16)
$AUDJPY, $AUDUSD, FXA Fibonacci Retracements, Articles (8/16)
Jim Rogers Not Buying Chinese Stocks, Buying During Collapse (8/13)
More recent articles (not in order)
China exports likely to return to growth: govt (featuring Xie, AFP)
Riding the China Tiger (Barron's)
China Rally Will Last, No ‘Bubble’ Seen, Harvest Says (Bloomberg)
Jim Rogers again on China Bubble (Youtube)
China’s Mills Should Refrain From Expansion for Three Years (Bloomberg)
China Stocks Cap Worst Week Since February on Valuation Concern (Bloomberg)
Asian Currencies Weaken as China Data Casts Doubts on Recovery (Bloomberg)
Sell China Stocks on ‘Bubble’ Concerns, Shenyin Says (Bloomberg)
China's export to resume growth in Q4: institutional forecasts (Xinhuanet)
Busch: Chinese Reality Reckoning (CNBC)
China Stocks Slump; Shanghai Composite Index Enters Correction (Bloomberg)
In conclusion, be careful.. Asia is taking a hit overnight. The right to bear arms w/ puts sometimes works. Watch FXI in real time below.
