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Market Measures

Monday – Friday | 9:00 – 9:20a CT

Trading Brazil and Mexico

Market Measures

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

The recent selloff in emerging markets, namely Brazil and Mexico, has not had a significant impact on the implied volatility in EEM, the emerging markets ETF. This study investigates the profitability of selling volatility in Mexico and Brazil directly.

The Study
  • Sold 16 delta strangles in EEM, EWW, and EWZ
  • Held to expiration & managed at 50% max profit
  • Compared profitability of direct country exposure and emerging markets fund exposure

Short strangles in all three emerging market ETFs proved profitable from 2018 to present. Although short strangles in EEM proved most profitable, we see trade opportunity in EWW and EWZ because of their increased implied volatilities.

Check out this Market Measures as Tom Sosnoff and Tony Battista interpret the takeaways.

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