On Friday, another wave of funds bet on bullish options for Chinese stock ETFs

Chinese stock ETF call options have been "bought out."

According to CCTV News, on the evening of January 17, President Xi Jinping had a phone call with U.S. President-elect Donald Trump. Xi congratulated Trump on his re-election and pointed out that both sides highly value their interactions and hope for a good start to U.S.-China relations in the new presidential term, wishing to promote greater progress in U.S.-China relations from a new starting point.

Driven by the optimism from the leaders' call, related ETFs surged on Friday, with the iShares China Large-Cap ETF (FXI) rising by as much as 2.9% and the KraneShares CSI China Internet ETF (KWEB) increasing by as much as 4.4%, both marking the largest single-day gains in over a month.

According to media reports, Chris Murphy, co-head of derivatives strategy at Susquehanna International Group, stated that investors are buying a large number of FXI call options expiring next weekend, with 4 million shares corresponding to the options contracts purchased at strike prices as high as $31-32. Additionally, there has been extra buying of FXI call options expiring in February, and demand for KWEB call options has also increased.

The buying of call options has also pushed up the implied volatility of FXI for one month, reaching its highest level since mid-December, and widened the premium of call options relative to put options (i.e., skew), indicating that the volatility of call options has further increased compared to that of put options.

However, some analysts pointed out that in the past few months, once the underlying stock index failed to rebound as expected, investors quickly sold the corresponding call options, and this phenomenon has occurred frequently.

For example, in early December last year, traders accumulated a large number of call options on Chinese stock ETFs, but these options were closed out with a loss of about $100 million