The iShares MSCI Brazil ETF (EWZ) has rebounded sharply, now up 19% for the year, surpassing the Nasdaq-100's 15% increase. This resurgence follows a prolonged sell-off from six-year highs in April. The rally may be linked to rising commodity prices or positive sentiment surrounding Brazil's upcoming general election.
Notably, options traders are showing increased interest, with EWZ's options volume exceeding six times the 30-day average, indicating a bullish sentiment. By midday, over 420,000 contracts had been traded, placing EWZ among the top 20 traded securities in the options market.
The trading activity is heavily skewed towards call options, with 400,000 calls compared to less than 30,000 puts, suggesting a bullish outlook. However, the presence of call selling complicates the interpretation, as it may indicate strategies to capitalize on volatility rather than outright bearishness.
The implied volatility of EWZ has risen, making options more expensive, which could lead traders to adopt strategies that benefit from price fluctuations