China ETF Option Trades Shift from $100 Million Gain to Major Loss
Traders who profited from China-linked ETFs now face significant losses after a market downturn
China, ETFs, Options Trading, Geopolitical Tensions, Donald Trump
Beijing: So, here’s the scoop. Traders were riding high on some call options for a couple of China-linked ETFs. They were looking at over $100 million in profits just a few weeks ago. But things took a turn for the worse.
From late November to early December, these traders jumped on the chance to buy options for millions of shares in two ETFs. At one point, they were feeling pretty good about their investments as the ETFs were climbing.
But then, just like that, the market shifted. By December 9, those positions were up about $138 million on an initial investment of around $225 million. However, the ETFs started to drop, and now they’re below where they were when the traders made their bets.
Chinese stocks have been on a downward slide since early December, entering a bear market. This is partly due to rising geopolitical tensions, especially with the upcoming inauguration of Donald Trump. Investors were hoping for some solid stimulus measures from China, but they were left disappointed.
Chris Murphy from Susquehanna International Group mentioned that it seemed like every new stimulus announcement had less impact than the last. Traders were waiting for a rebound or more good news, but it just didn’t happen.
On Friday, the trading volume was massive, with tons of calls changing hands. But based on the prices from early December, it looks like they’re facing a loss of over $100 million now. Quite the rollercoaster ride, huh?
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