On Monday, options traders expressed bullishness toward China’s exchange-traded funds (ETFs) by engaging in significant bullish options positioning, Susquehanna International Group options strategist Alison Edwards noted. Namely, the activities in Xtrackers Harvest CSI 300 China A-Shares ETF (NYSE:ASHR) and KraneShares CSI China Internet ETF (NYSE:KWEB) indicated expectations of an increase in their share prices.
Two separate initial transactions were reported for ASHR. Initially, the investor bought 10,000 July 29 calls, with a delta of 0.36, at a price of $1.14 each. Shortly thereafter, another investor entered the market, bought 11,500 of the same July 29 calls, also with a delta of 0.36 but at a slightly higher price of $1.16, and executed the trade delta neutral. These trades suggest that investors expect ASHR shares to climb above $29, which would represent an 11.5% increase from current levels, by mid-July.
In the case of KWEB, the options market has seen the buying of the 25,000 33/40 call range. March at $0.52 per spread, and 8,000 call spreads on 32/37. March for $0.61 each. These call spreads are a bullish strategy, where investors buy a call option at a lower strike price and sell another at a higher strike price within the same expiration period. The structure of these trades implies the prediction of an increase in the value of KWEB shares, with target prices set within the selling price range.
These hefty options bets come as investors navigate China’s dynamic market landscape, with ETFs like ASHR and KWEB providing targeted exposure to sectors within the Chinese economy. Targeted bullish options strategies used by investors reflect specific growth expectations in these segments, aligning with broader market sentiments about the potential of Chinese stocks.
Transactions in both ETFs, ASHR and KWEB, highlight a trend among some investors positioning themselves to profit from the expected upward movement in Chinese stocks. The use of option strategies such as buying calls and call spreads allows for significant leverage with limited downside, if the expected upside materializes by the chosen expiration dates.
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