Analysts at Susquehanna have identified a major bearish options trade made against a popular Europe-focused ETF, which could be subject to increasing volatility as France’s presidential election looms in April.
Bloomberg has the details on the major move:
Bears are targeting a U.S.-listed exchange-traded fund that follows euro-area equities. A record 95,350 put options on the SPDR Euro Stoxx 50 ETF changed hands on Friday as a trader bought 45,000 March/May $33 put spreads on the security, which is mostly composed of French stocks. The investor is preparing for a rise in volatility after next month’s expiration and a potential drop by May, Susquehanna International Group analysts wrote in a note to clients, saying the trader may be positioning for a move from the French election.
France’s upcoming presidential election is expected to be highly contested, with several candidates holding a reasonable chance of winning. The candidates range from the far left to the far right of the political spectrum, so a great deal of potential change hangs in the balance for the world’s seventh largest economy.
FEZ is actually sitting right near 52-week highs, so this big bearish bet is nothing if not brazen.
The SPDR Euro Stoxx 50 ETF (NYSE:FEZ) was unchanged at $34.34 in premarket trading Monday. Year-to-date, FEZ has gained 2.63%, versus a 2.60% rise in the benchmark S&P 500 index during the same period.