Options Traders are Buying Calls on RSX

Shares of the VanEck Vectors Russia ETF are trading higher today as Trump meets with Russian Foreign Minister Sergey Lavrov

May 10, 2017 at 2:52 PM
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Call buying has been unusually popular on the VanEck Vectors Russia ETF (RSX) in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the exchange-traded fund's (ETF) 10-day call/put volume ratio stands at a top-heavy 9.22, and ranks just 4 percentage points from a 52-week peak. In fact, call open interest on RSX shares is docked in the 84th percentile of its annual range, with 191,205 contracts currently open.

This heavy call-skew is evident among the short-term options crowd, too, per the ETF's Schaeffer's put/call open interest ratio (SOIR) of 0.63. Not only does this show that call open interest comfortably outweighs put open interest among options set to expire in three months or less, but it ranks lower than 93% of all comparable readings taken in the past year.

The bulk of this attention has seemingly been paid to the fund's May 21 call, which is home to peak open interest of 26,849 contracts. It looks like some of the activity here is possibly the result of a long calendar spread initiated on Monday alongside the June 21 call, meaning one options trader is expecting minimal price movement over the next few weeks.

The May 20 call has also been active in recent weeks, with the major options exchanges confirming buy-to-open activity. In other words, call buyers expect RSX to be sitting above $20 at next Friday's close, when the front-month options expire.

Amid this increased attention toward long calls, however, near-term RSX puts have rarely been cheaper, relative to calls. Specifically, the ETF's 30-day implied volatility skew of 9.4% ranks lower than 85% of all comparable readings taken over the past year.

Looking at the charts, RSX shares hit a two-year high of $22.19 on Jan. 27, but have since pulled back to their supportive 160-day moving average. At last check, RSX shares were seen trading up 1.5% at $20.63, with the ETF in focus today as President Donald Trump meets with Russian Foreign Minister Sergey Lavrov, which comes in the wake of yesterday's unexpected firing of FBI Director James Comey -- the man in charge of looking into Russia's possible interference in the presidential election.

rsx daily chart may 10


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