$EEM Options Intelligence

# EEM Options Trade Analysis - November 17, 2025

🎯 SELL EEM NOV 21 55/56 CALL SPREAD

Stock Price: $54.75 | Entry: $0.35 credit

I recommend this short call spread because the term structure reveals a critical overpricing signal: the 4-day November 21 expiration trades at 22.5% Clean IV, sitting 7.2% above the 15.3% baseline volatility—a clear SELL signal. Combined with EEM's neutral technicals (RSI 50.47, price 0.7% below 20-day MA) and the broader emerging markets headwinds from tariff concerns, this premium collection strategy captures inflated short-term volatility while limiting risk.

## Trade Metrics

SELL EEM NOV 21 55/56 CALL SPREAD
• Risk: $65 | Reward: $35 (54% return on risk)
• Breakeven: $55.35
• Max Loss: $65 if EEM > $56 at expiry
• Max Profit: $35 if EEM < $55 at expiry
• Win Rate: 68% (based on delta)
• Days to Expiration: 4

## Term Structure & Volatility Analysis

The term structure reveals a compelling premium-selling opportunity:

• Baseline 90-day Vol: 15.3%
• 4-day (Nov 21) Clean IV: 22.5% — 7.2% ABOVE baseline 🔴 STRONG SELL signal
• 9-day (Nov 28) Clean IV: 19.0% — 3.7% above baseline
• 14-day (Dec 5) Clean IV: 18.9% — 3.6% above baseline

The sharp IV spike in the November 21 expiration creates a mean reversion opportunity. This near-term overpricing typically collapses as expiration approaches, allowing profitable exits well before Friday close.

## Greeks & Volatility

• Net Delta: +0.28 (slightly bullish bias, but capped at $56)
• Theta: +$8.75/day (aggressive time decay working in your favor)
• Vega: -$12 (benefits from IV compression back to baseline)
• Current IV: 26.0% average (elevated vs 16.8% historical)
• IV Rank: 100% (Extreme — premium-selling conditions)
• Put/Call Volume Ratio: 0.00 (Extremely bullish sentiment, calls heavily bought)

## Why This Trade

Term Structure Foundation: The 22.5% IV in November 21 expiration sits 7.2% above the 15.3% baseline volatility. This represents statistical overpricing relative to EEM's historical volatility. When near-term options trade this far above baseline, they typically revert within days, creating a high-probability fade opportunity.

Market Context: EEM has faced significant headwinds from Trump's reciprocal tariff plans set for announcement this week. The search results note that "emerging market stocks headed for worst session since 2020 on Friday amid rising fears from Trump's tariffs." This fear has inflated short-term IV artificially. However, EEM's technical setup suggests limited downside: RSI at 50.47 (neutral, not oversold), price at $54.75 trades only 0.7% below the 20-day MA at $55.13, and the ETF remains above the 200-day MA at $48.11, maintaining bullish structure.

Specific Setup: The 55/56 call spread targets the resistance zone where EEM has struggled. With only 4 days to expiration, theta decay accelerates dramatically—you collect $8.75 per day in time decay. The 0.28 delta exposure is manageable; EEM would need to rally 0.5% just to reach your short strike.

## Pro Analysis

• Current IV: 26.0% vs Historical: 16.8% (55% premium)
• IV Rank: 100% (Peak conditions for selling)
• Expected Daily Move: ±0.90 (1.63%) — Well below your $1.00 spread width
• Put/Call Ratio: 0.00 (Extreme call buying, suggesting complacency)
• Market Maker Max Pain: $60 (suggests underlying wants to move higher, but time decay favors short premium)
• Technical: RSI 50.47 (neutral), MACD bearish (0.33 vs signal 0.46), Price below 20MA

## Trade Management

• Entry: Place limit order at $0.35 credit (bid/ask likely $0.30/$0.40)
• Target: Close at $0.15 (57% profit) — Typically achievable by Wednesday
• Stop: Exit if EEM breaks above $55.50 (threatens short strike)
• Time Stop: Close by Thursday EOD (1 day before expiration) to avoid gamma risk

## Market Overview

The emerging markets sector faces a critical inflection point. Trump's tariff announcements loom this week, creating uncertainty that has artificially elevated short-term volatility. However, EEM's year-to-date performance (+8% vs S&P 500's -4% decline) demonstrates underlying strength. The ETF's dividend yield of 4.05% with next ex-date June 16, 2025, provides fundamental support.

Sector Dynamics: Stretched U.S. valuations are driving capital rotation into international equities, supporting EEM's longer-term thesis. However, near-term tariff fears have created a volatility spike that's disconnected from fundamentals—exactly the type of mean-reversion setup premium sellers exploit.

Technical Levels: Support at $54.50 (today's low), resistance at $55.08 (today's high). The 20-day MA at $55.13 represents a natural ceiling. The expected daily move of ±0.90 is insufficient to threaten your $56 short strike.

## Pricing Validation

• 55 Call intrinsic value: $0 (OTM at $54.75), trading at ~$0.65 ✅
• 56 Call intrinsic value: $0 (OTM), trading at ~$0.30