We saw rather well-timed upside positioning in the fifth largest “Europe Equity” ETF options late last week, consisting of August 39 strike calls in FEZ (SPDR Euro STOXX 50, Expense Ratio 0.29%, $2.9 billion in AUM).While the options are still out-of-the-money given FEZ’s $37 handle, the sharp and sudden jolt higher following France’s election results which imply a runoff between Macron and LePen have put the holders of these options in the driver’s seat, because there are still several months left until August expiration.
FEZ notably has a 36% weighting to France as it is its highest single country allocation. FEZ traded huge volume last Thursday (nearly 10 million shares versus ADV of 2.7 million shares), right around the time these options started to trade, and the fund has seen about $435 million appear year-to-date in the form of creations.
Larger broad based Europe ETFs that will also likely remain in focus in the near term given the French elections backdrop include VGK (Vanguard FTSE Europe, Expense Ratio 0.10%, $11.5 billion in AUM), EZU (iShares MSCI EMU, Expense Ratio 0.50%, $9.3 billion in AUM), and HEDJ (WisdomTree Europe Hedged Equity, Expense Ratio 0.58%, $9.3 billion in AUM). These are the largest funds in the space presently ahead of FEZ.
For those looking for a pure-play “France” trade, the list is extremely thin with one choice presently, EWQ (iShares MSCI France, Expense Ratio 0.48%, $393 million in AUM). Trading volume in the product has been extremely high the past four or five sessions and the fund is gapping up in excess of 5% just today.
The SPDR EURO STOXX 50 ETF (NYSE:FEZ) was trading at $37.86 per share on Monday morning, up $1.9 (+5.28%). Year-to-date, FEZ has gained 13.15%, versus a 5.94% rise in the benchmark S&P 500 index during the same period.
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.
Paul 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.