Options trading is typically light on the iShares MSCI ACWI ETF
In contrast to its main holdings, the
iShares MSCI ACWI ETF (ACWI) isn't known for it's elevated options activity. The exchange-traded fund (ETF) tracks the performance of big-cap global shares, with FAANG stocks Apple and Amazon among its largest holdings. At Wednesday's close, 32,367 calls and 34,248 puts are currently open -- in the middle 43rd annual percentile.
Yesterday, however, 16,606 puts traded on ACWI -- 66 times the average daily volume of 252 contracts. As a point of comparison, just one call crossed the tape. Nearly all of the day's volume was due to a 16,590-contract block of January 2018 60-strike puts that was likely bought to open for $1.1 million (number of contracts * $0.67 premium paid * 100 shares per contract).
This initial cash outlay represents the most the put buyer stands to lose, should ACWI be trading north of $60 at the close on Friday, Jan. 19, when the options expire. Profit, meanwhile, will accumulate on a move below breakeven at $59.33 (strike less net debit).
Looking at the charts, the last time the ETF traded below $60 was on Jan. 4, and has since surged more than 13%. In fact, ACWI hit a record high of $67.81 earlier today, last seen trading at $67.75. As such, it's possible yesterday's massive put buy is a result of a trader initiating an
options hedge against a long stock or portfolio position in case of a year-end decline in global stocks.