Massive Put Volume Hits China ETFs as Traders Turn Bearish
FXI sees 218,000 put contracts trade—8x average volume. ASHR put activity surges 5x as investors hedge China exposure.
Someone is making a large bearish bet on China.
The iShares China Large-Cap ETF (FXI) saw extraordinary put volume Wednesday morning, with 218,213 contracts trading by midday—8 times the average daily volume. Put activity ran 6x call volume, signaling distinctly negative sentiment.
The bulk of the action centered on the March 33.00 strike puts. Traders bought more than 180,000 contracts at $0.17, with open interest at just 34,757 prior to today's session. That's a new position or a major addition to an existing one—not traders closing out prior bets.
FXI closed Wednesday at $39.30, meaning the March 33 puts are roughly 16% out of the money. For those contracts to land in the money by expiration, FXI would need to drop below the October 2025 lows.
The ASHR Activity
It's not just FXI.
The Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR) recorded 50,005 put contracts—5x average daily put volume and 100x today's call volume. Nearly all the activity occurred in the March 20, 2026 expiration, concentrated in two large block trades.
Traders bought the March 29.00 strike puts at $0.15, paying the ask price rather than waiting for a better fill. When big players pay the offer on size, they typically have conviction about direction.
ASHR provides exposure to mainland Chinese equities—the A-shares that trade in Shanghai and Shenzhen. It's a purer China bet than FXI, which holds Hong Kong-listed shares of companies like Alibaba, Tencent, and JD.com.
The simultaneous put buying across both ETFs suggests a macro China hedge rather than a company-specific view.
Why Now
China's equity markets have struggled since hitting 52-week highs in early October.
FXI peaked at $42.00 on October 3 following Beijing's stimulus announcements, which sparked a brief rally as traders bet on policy support. Three months later, the ETF sits 6% below that high and has drifted lower throughout January.
The stimulus disappointment thesis is straightforward: China announced big plans but hasn't delivered enough fiscal firepower to reignite growth. Property sector distress continues. Consumer confidence remains weak. Export growth faces tariff uncertainty.
Trump's Davos comments this week added another layer of concern. While the administration's immediate tariff threats target Europe over Greenland, the broader trade policy direction implies continuing pressure on Chinese goods. The tariff framework signals willingness to use trade as leverage.
For institutional investors with China exposure—whether through direct holdings or global funds with Chinese constituents—hedging makes sense here.
Reading the Options Flow
Put buying at this scale can mean several things.
Pure directional bet: Someone thinks FXI drops below $33 by March and is buying cheap insurance to profit if it does. At $0.17 per contract, the risk/reward is asymmetric—limited downside, significant upside if China sells off hard.
Portfolio hedge: Large asset managers with China exposure often buy protective puts rather than selling underlying shares. The put position limits losses if China tumbles while preserving upside participation if sentiment reverses.
Spread component: The visible put buying might be one leg of a larger spread strategy—perhaps a put spread or collar—that mutes the directional signal.
The OI put/call ratio on FXI currently sits at 1.03, indicating roughly balanced positioning overall. Today's activity skews that ratio more bearish, but it's not extreme by historical standards.
Technical Context
FXI's three-month downtrend is clear on the chart.
The ETF broke below its 50-day moving average in late December and hasn't reclaimed it. The 200-day average sits around $36.50—still above the March 33 strike where put buyers are targeting.
Support exists near $37, where FXI bounced in November. A break below that level opens the path toward the $33-34 zone that aligns with the put strike.
Resistance clusters around $41-42, the October highs. Any rally faces selling pressure from disappointed bulls who bought the stimulus hype.
For options traders, the current setup favors defined-risk bearish plays over outright long puts. Volatility on China names isn't cheap after the recent chop, and theta decay erodes long premium positions quickly.
What to Watch
The options flow suggests large players expect China weakness through March. That doesn't mean it happens—plenty of hedges expire worthless—but the positioning adds a data point to the bearish case.
Catalysts that could move China either direction:
- Additional stimulus announcements from Beijing
- Economic data showing growth stabilization or deterioration
- Tariff policy developments affecting Chinese exports
- Property sector news, positive or negative
The March expiration gives these trades roughly two months to play out. Between now and then, market volatility could easily swing China ETFs in either direction.
For traders not already positioned, the elevated put activity argues for caution on new long China exposure. Let the big players fight it out first.