The last 6 weeks have not been kind to EWW, the Mexico ETF. It’s down over 9% during that time on the weight of trade issues. And with the latest shot of tariffs, it gave up the bounce it had in the middle of last week. Despite that, EWW has managed to outperform the big US indices like SPY, QQQ and IWM. Mexico’s economy isn’t in that bad of shape, with inflation down and gov’t debt a modest 46% of GDP. To keep things moving along, it wouldn’t surprise me if the AMLO government cut a deal with Trump. What’s the downside for Mexico? That’s why you might consider a contrarian bullish strategy in EWW if you think it might rally off these lows. If you are bullish, the long call vertical that’s long the 41 call and short the 43 call in the July weekly expiration with 38 DTE is a bullish strategy that has a 68% prob of making 50% of its max profit before expiry and that generates $.14 of positive daily theta.
This Trade Is
- [19/06/04] – Moving this to the July monthly expire. As there is no OI on this weekly. Same strikes.
- [19/06/04] – Canceled order. EWW gap up. Spread trading at $1.42 debit at close.