Bearish Mexico Stock Options Reward Traders With 200% Returns (Puts on EWW)

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April 27, 2009 3:56pm NYSE:EWW

pigonatoiletApril 27 (Bloomberg) — Options traders who placed bets last week that Mexico’s outbreak of deadly swine flu would spur a stock-market sell-off earned more than 200 percent on their investments today.

Contracts giving the right to sell the iShares MSCI Mexico Investable Market Index Fund for $31 by May 16 jumped as high as $1.86 today from the 60-cent closing price last week, according to data compiled by Bloomberg at 2:06 p.m. New York time. The contracts were the most-traded options today on the iShares fund, which mimics the performance of the MSCI Mexico Index, a 25-company benchmark for Mexican shares.

The fund, which changes hands on U.S. exchanges like a stock, lost as much as 8.5 percent today to $30.29 after President Felipe Calderon declared emergency powers to fight the virus, which has killed as many as 149 people in Mexico. Mexico’s Health Minister Jose Cordova cancelled school classes on April 24 to prevent the spread of a “new strain of influenza,” according to an e-mailed transcript of a speech in Mexico City.

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