EWT has remained unsteady amid U.S.-China trade tension
Taiwan ETF iShares MSCI Taiwan Index (EWT) is up 1.4% at $34.45 this afternoon, on pace to mark its highest close in a week. U.S.-China trade tensions have sent the ETF on a wild ride this calendar year, specifically over the past few months. A point of contention between the rivaling U.S. and China has been Taiwan, which has sent the index's options volume soaring of late. Today, it looks like one trader is betting on a massive move for EWT over the next few months.
On the charts EWT has had a volatile run, the equity recently gapping lower and back below its supportive 80-day moving average. While the shares have managed to climb higher over the past few days thanks to support from the $33 floor, they remain below the aforementioned trendline, and sport an underwhelming 8% year-to-date gain.

This afternoon, EWT's call volume is 178 times its average intraday amount, and pacing in the 99th annual percentile, with 2,322 calls exchanged so far. Puts are also active, at eight times the intraday average, with just over 2,000 exchanging hands. Most active are the December 34 put and 35 call, a transaction in what looks like a long strangle.
Specifically, it looks like the trader has bought 2,000 calls for $1.12 each, and the same amount of puts for $1.56 each. This makes a total net debit of $2.68 per pair of options, or a $536,000 total (number of contracts x 100 shares per contract x net debit), which represents the maximum risk. The trader will profit if EWT breaks out above $37.68 (strike plus premium paid), or if the ETF falls below $31.32 (strike minus premium paid).
Had the trader simply bought the 35-strike calls, they would only benefit if the stock stayed at or above $35 when the options expired on December. On the flip side, if the trader only purchased the 34-strike puts, they would walk away with a profit only if the stock stayed at or below $34 upon December expiration. The long strangle allows the trader to play both sides of the trade and walk away with a profit, barring EWT does, in fact, see a large swing in either direction by December 20.