Bulls are betting big on this global ETF that's deep in a bear market

• Options volume in KWEB reached nearly three times its 30-day average on Tuesday, with 612,000 of 628,000 contracts traded being calls, representing $46 million of $48 million in total premium
• The most popular trade was the December 18 $29-strike call, which requires a 23% rally to break even, with one buyer purchasing nearly 102,000 contracts worth $11 million
• KWEB notched a three-day rally of almost 4% following positive Chinese economic data, though similar gains in the broader China ETF (FXI) quickly faded

Summary: Options Traders Bet Heavily on Chinese Tech ETF Despite Bear Market

Key Development:

Options traders are making aggressive bullish bets on the KraneShares CSI China Internet ETF (KWEB), despite the fund being deep in bear market territory. This contrasts sharply with U.S. stocks, which just completed their best quarter since 2020.

Trading Activity:

• KWEB options volume reached nearly 3x the 30-day average on Tuesday
• Of 628,000 contracts traded, 612,000 were calls (bullish bets)
• Over 250,000 call purchases versus under 4,000 put purchases
• $46 million of the $48 million in total premium went to calls
• This represents an unusually high degree of bullish sentiment for a security with weak momentum

Most Significant Trade:

The largest position was a buyer purchasing nearly 102,000 December 18 call options at the $29 strike price—an $11 million bet requiring a 23% rally from current levels to break even. This was structured as a spread with sales of higher-strike calls.

Market Context:

Chinese stocks showed recent improvement after manufacturing activity returned to growth and services PMI hit the highest level since May. KWEB rallied nearly 4% over three days following the data, though the broader Chinese Large Cap ETF (FXI) bounce faded quickly.

Companies Mentioned:

Nike was also referenced in relation to negative options flow ahead of earnings.

Implication:

The aggressive call buying suggests sophisticated traders anticipate a potential reversal in Chinese tech stocks despite prolonged underperformance, possibly betting on continued economic improvement or policy support.