Global X FTSE Greece 20 ETF (GREK) Tide Shifts to Bulls' Camp

GREK option trends reflect the wishy-washy sentiment tide

Jun 23, 2015 at 3:00 PM
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Greece, Greece, Greece. Unless you've been living under a rock, you've encountered countless headlines about the country's fiscal crisis and its roller-coaster negotiations with creditors. Against this backdrop -- and ahead of a key repayment deadline on June 30 -- it's no surprise the Global X FTSE Greece 20 ETF (GREK) has garnered much attention.

GREK is an exchange-traded fund (ETF) based on the 20 biggest stocks on the Athens stock exchange. According to data from Google Trends, interest in the ETF is at an all-time high, even more so than the 2013 Greek debt saga. GREK options have also been more popular than usual, and with an apparent light at the end of the tunnel with creditors, it looks like the sentiment tide is shifting back to the bulls' camp. 

Earlier this month, when things weren't so rosy between Greece and its lenders, GREK put volume hit fever pitch. On June 16, GREK saw roughly 9,400 puts change hands in a single session -- five times the norm. Traders bought to open July 9 puts -- most popular on the day -- amid apparent expectations for a Greek default and/or "Grexit." Specifically, the puts will move into the money if GREK breaches $9, near all-time lows, before the close on Friday, July 17, when the options expire. 

However, with hopes of a debt deal gathering steam -- and pushing the major U.S. indexes higher -- it seems the tide has shifted. In the past five sessions, GREK has seen roughly 44,000 calls change hands, compared to 31,000 puts. Narrowing that, GREK calls more than doubled puts on Friday, and yesterday outpaced them by a margin of roughly 3.5-to-1. 

Most popular over the past week has been the July 13 call, where more than 5,000 contracts have been opened. This strike is now home to peak open interest in the newly front-month series, with more than 7,000 contracts outstanding. The July 12 call has been another popular option, with more than 5,000 contracts open, while the aforementioned July 9 put is home to fewer than 5,000 contracts.  Those who purchased the July 13 call to open expect GREK to rally north of $13 by options expiration. 

As the debt talks have gone, so too has the Global X FTSE Greece 20 ETF (GREK). The ETF was declining steadily from mid-2014 until late April, and since then has bounced along support at $10 and resistance in the $13 neighborhood.


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