What’s up Valhalla, EEM is the emerging markets ETF, the emerging markets have not done very well this year with a strong US dollar. The EEM ETF is down about 5 percent on the year currently. Mostly comprised of Chinese and Asian companies, you can see the full ETF holdings below.
https://www.marketwatch.com/investing/fund/eem
With 2022 rapidly approaching, portfolio rebalancing will happen in the 1st Quarter of the new year. With that being said money managers and institutions want to get into equity’s and positions that have the biggest potential for gains for the new year, not into equity’s that have already had massive runs and percentage gains this past year.
Every year the EEM sees massive inflows in January and has peaked in January and February for the last few years, if you take a look at the yearly chart and 5 year chart, you can see the spikes in January and February.
What caught my eye was the massive institutional block trades being bought for deep OTM strikes on the EEM option chain, just like the prior year January run up
Institutions are buying these deep otm strikes expecting another large inflow into the emerging markets come 2022
I’ve been following this option chain for the past few weeks and the OI is massive. These are not retail traders Buying these contracts, these are large institutional buyers aka “Smart Money” placing huge bets on these EEM contracts.
I played this exact same setup last year, and ended up paper handing what would have been a 10x if I had held thru the red.
My current position is playing the January 21st Primary monthly expiration, which is important because institutions typically only trade the primary monthly expiration and not the weeklys.
If you take a look at the OI on the options chain, for the Jan, 21 primary, it is pretty loaded up.
My current position is most heavy in the 54 strike options. Which have an OI of close to 112k
My position has already been up 200 percent, and I have not sold any yet, as I’m expecting a massive inflow come the new year. These options are dirt cheap and they have the potential to be a 5-10 bagger. They are currently only .03 cents, I got a few hundred more contracts filled on Friday for 3.00 each
Again like any far otm options play, know the risk and only put in what you can afford to lose.
These strikes are very far deep otm currently, but These contracts don’t need to be anywhere near the strike price to make money, and provide a fat return.
Keep it on the watchlist and do your own DD but figured I would share my position and thoughts with the community! Not financial advise and invest at your own risk! Cheers! 