July 17, 2013
A respected Twitter member noted today and yesterday the "hate" that EEM is receiving compared to the start of the year. Its performance has diverged markedly from the US markets. He suspects it will outperform from here, or that the US market will pull back to more closely match its performance, or both. I agree with this - mostly the EEM catching bid soon, if for no other reason than to be contrarian (fund managers are the most bearish on EEM since December).
In that vane, today I purchased a IWM 91/94/97 Sept put butterfly as a reversion to the 55 ema would take it to 98. That is the part of the formula where the US market declines. I highly doubt holding this near expiration and will be looking for a bottom to exit.
In the next few days I also plan on buying some EEM far out of the money Sep calls. If there is a reversion between either US markets or the EEM, one of these two trades should benefit.
Best Regards,
N. Puckett
Disclosure: I am short IWM.
Additional disclosure: I plan on buying EEM calls in the next couple of days.
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