Bearish Emerging Markets Bets Fail To Pay Off

March 13, 2017 10:56am NYSE:EEM

Globe on Europe

Analyst Paul Weisbruch of Street One Financial brings us his daily fund flows update, which today points out some ill-timed bearish options bets on a popular emerging markets fund, outflows in the world’s largest ETF, and a continued flight away from corporate bond funds.


Ahead of this Friday’s options expiration, we saw some late week very near term hedging via EEM (iShares MSCI Emerging Markets) involving the March 37 puts. With EEM bouncing back strongly however in the past two sessions well above the $38 mark, these options will likely not be in-the-money barring a significant decline in the space in the next several days.

In similar looking activity, March 24 puts were purchased in XLF (SPDR Financial) late last week as well, with the fund presently trading around the $24.84 level. In fund flow activity, recent inflows into SPY (SPDR S&P 500) have quickly reversed to outflows, as the fund has seen more than $4.1 billion vacate via redemptions in the past trading day, but competing fund IVV (iShares Core S&P 500) has attracted more than $2.4 billion during this time frame which is substantial for this particular name.

Finally, outflows in HYG (iShares HY Corporate Bond) continue to build, with more than $2.2 billion leaving the fund now in the past several sessions, and competing fund JNK (SPDR HY Bond) seeing some of the same (-$535 million out).

The iShares MSCI Emerging Markets Index ETF (NYSE:EEM) was trading at $38.39 per share on Monday morning, up $0.38 (+1.00%). Year-to-date, EEM has gained 9.65%, versus a 6.28% rise in the benchmark S&P 500 index during the same period.

EEM currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #2 of 77 ETFs in the Emerging Markets Equities ETFs category.


Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch

paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.


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