Bulls are betting big on this global ETF that’s deep in a bear market
A container ship docked at the container terminal in Qingdao, China’s eastern Shandong province, on June 25, 2026.
– | Afp | Getty Images
US stocks continue to gain Nasdaq It’s closing out its best quarter since 2020. Things couldn’t be more different in China than around the world.
iShares China Large Value (FXI) It is down 18% for the year and is in the middle of a 9-month bear market. Popular Chinese internet fund, KraneShares CSI China Internet ETF (KWEB)It is down more than 40% from its record in October due to ongoing concerns about AI valuations and commodities flaring.
And on Tuesday alone, Nike shares fell after hours of trading despite a drop in earnings after the shoe giant raised concerns about the resilience of Chinese consumers.
However, options traders believe these trends may change.
Chinese stocks finally caught up with the bid to expiration last week after the country reported that manufacturing activity had returned to growth and its services PMI was at its highest level since May. FXI’s rebound quickly faded, but KWEB posted a three-day gain of almost 4% and investors are flocking to buy more.
Options volume on KWEB was nearly three times the 30-day average on Tuesday, according to Cboe LiveVol data, and 612,000 of 628,000 contracts traded were calls, according to ThinkOrSwim data. More than a quarter million of these trades were likely initiated by buyers, while fewer than 4,000 put purchases occurred. Of the $48 million in premium trades, $46 million were tied to calls.
This is a rare bullish trend in option flows for any security, especially one with little recent price momentum.
KraneShares CSI China Internet ETF, 1 year
17 of the top 20 contracts traded on KWEB on Tuesday were calls, and they weren’t just short-term speculators; only two contracts will expire on Thursday. The most popular contract by volume and dollar amount was the 29-strike contract expiring on December 18th, which needed a 23% increase to breakeven.
The biggest trade of the session, according to SpotGamma data, was the taker of almost 102,000 of those calls; An $11 million purchase was offset by $930,000 in sales of 35-strike calls expiring the same day and $770,000 in sales of 33-strike calls expiring Sept. 18, according to SpotGamma data.
