Brazilian Stocks Surge Past Nasdaq-100 Year-to-Date Performance, Drawing Heavy Options Activity

Men look at a a board with the BOVESPA index at the Sao Paulo Stock Exchange (B3) in downtown Sao Paulo, Brazil, on April 7, 2025.

Nelson Almeida | Afp | Getty Images

Brazilian stocks are rallying again after a monthslong sell-off from six-year highs reached in April. The iShares MSCI Brazil ETF (EWZ), which is up more than 12% from last month’s lows, is now 19% higher on the year. It has outperformed the Nasdaq-100‘s 15% year-to-date advance.

The rally may be connected to surging commodity prices or growing optimism surrounding the country’s upcoming general election in October. Regardless of the catalyst, options traders are entering the market in significant numbers, placing unusually large bets on EWZ that skew more bullish than bearish.

Options volume surged to more than six times the 30-day average on Wednesday, according to Cboe LiveVol data. With more than 420,000 contracts traded by midday, EWZ ranked among the top 20 traded securities in the options market, alongside Alphabet and the Cboe VIX Index, according to SpotGamma data.

That is a rare ranking for any non-U.S. stock or ETF. Whether the options trading signals a strong directional bias is a more nuanced interpretation.

Calls dominate trading in EWZ, with 400,000 calls trading versus fewer than 30,000 puts, but almost as many calls are being sold as bought, according to ThinkOrSwim. Of the $50 million in premium traded, nearly all of it — $48 million — is tied to call contracts, with roughly $26 million of trades likely initiated by buyers, according to SpotGamma.

One factor in the bulls’ favor: The top 20 contracts traded are all calls, which is an exceptionally rare occurrence in any options flow. While selling calls is not inherently bullish, it is not necessarily bearish either, and frequently represents a component of bullish spread trading or directionally neutral positions.

The call-sellers may simply be capitalizing on heightened volatility in the fund. While the price has rallied over the past three weeks, implied volatility has risen alongside it, climbing from 0.28 to 0.39, according to ThinkOrSwim data. This indicates that options are generally trading at their highest premium since late June, and traders may be pursuing strategies that collect premium by wagering that swings in the fund will moderate.

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