Bearish Options Bets Dwindling on Russia ETF (RSX, ERUS)

With Brent crude oil futures, the global benchmark contract, sitting at eight-month lows, it's not surprising that the Market Vectors Russia ETF RSX has lost 19.3% in the past month. What may be surprising is that bearish options bets on RSX, the oldest and largest Russia-specific ETF, have fallen to the lowest levels in 15 months. The level of ownership of RSX puts fell below call open interest on May 30, retreating to the lowest level since February 2011, according to Bloomberg data. Brent crude's recent decline and the ensuing plunge on Russia's Micex, the country's benchmark equity index, has sent Micex-listed stocks to 4.8 times estimated profits, Bloomberg reported. Put interest in RSX has dropped 80% in the past two weeks while the fund's put-to-call ratio dropped from a two-year high of 2.36-to-1 on April 26, according to Bloomberg. Open interest in the June $25 and $24 RSX puts is a combined 4,330 contracts. Those strikes are in the money at the moment. Open interest in the June $23 puts, which are slightly out of the money, is nearly 3,610 contracts. Those contracts expire on June 15. The recent decline in Russian equities RSX and the rival iShares MSCI Russia Capped Index Fund ERUS sporting cheaper valuations than some other marquee emerging markets ETFs. For example, ERUS has a current P/E ratio of 7.71. By comparison, the iShares MSCI Emerging Markets Index Fund's EEM trades for 16.3 times the most recent 12 months of earnings for its constituents. The The iShares MSCI Brazil Index Fund EWZ has a P/E of 15 while the iShares FTSE China 25 Index Fund FXI, the largest China ETF, has a P/E of almost 13. In the past month, RSX, which has over $1.5 billion in assets under management has been slightly outperformed by ERUS and the SPDR S&P Russia ETF RBL. The worst-performing Russia ETF over that time is the Market Vectors Russia Small-Cap ETF RSXJ, which has slumped 20.4%. RSX is the only of the four Russia ETFs that is optionable. For more on Russia ETFs, please click HERE.