Derivative Play On Germany's Woes: Austria ETF

Austria has kind of been flying under the radar throughout the European sovereign debt crisis. Kind of. Despite the lack of headlines from Austria, the iShares MSCI Austria Investable Market Index EWO is down 11% in the past month, but that doesn't mean the party is over for the bears. Austrian supports Germany's ban on naked shorting of credit default swaps, so this may be a guilt by association trade. Austria has joined Germany in trying to get other European countries to support the ban, but there doesn't appear to be any takers. Austria's financial watchdog banned naked shortselling of Austrian bank and insurance stocks after the collapse of Lehman Brothers in 2008 and has extended the ban every three months ever since, according to Reuters. EWO tumbled yesterday when Germany's short ban was announced and with the ETF trading at $16.83, support at $15.50 could be challenged in the near-term. Remember that Austria has significant exposure to Eastern Europe through bank loans and that makes Austria a dubious proposition at this point.