During our Analyst meeting this morning, I observed the relative "calm" in the Chinese Large Cap ETF $FXI and how, while down for the day, it is still holding in a range it's been in for over three weeks now.
And we love how it's holding this range as a healthy consolidation from its late September breakout.
There's nothing about this chart that is bearish to me:
When I mentioned the relative bargain in long-dated call options in $FXI, JC said: "If we get rotation into China, this trade could make our year.
I agree.
Here's the Play:
I like buying $FXI January 2026 35-strike calls for approximately $3.00 per contract. This premium I pay today is the most I can lose in this trade and I'll size my position accordingly.
Meanwhile, I'm going to take an active roll in reducing my cost basis in this trade by selling nearer-term calls against it. This might not be for everyone (JC said he's not going to do it, for example).
Today, I'll also sell December 35 calls against this position for an approximately 52-cent credit. And I'll look to roll them forward to January if/when the premium in these calls shrinks to less than 20-cents. I'll look to repeat this monthly for as long as I can, though (hopefully) I'll be rolling them up as a trend develops (which I'll do if the short calls ever go in-the-money). I'll keep everyone updated on my moves in the ASO live chat and in our weekly Jam Sessions.
Again, selling calls against this position is optional and should only be executed by those of us who understand the nuances and are willing to manage this position. Otherwise, nothing wrong with just buying the January 2026 calls and calling it a day.
