Saqib Ahmed Iqbal

NEW YORK (Reuters – Trading options on a tiny, soon to be defunct, exchange-traded mutual fund that tracks Russian stocks drew a rush on Tuesday as investors speculated on the future performance of the funds shares in its final days.

This surge in trading occurred a day after Direxion, a fund issuer, announced that its Russia 2x ETF would stop trading on March 11 due to increased volatility and Russian securities restrictions imposed following the invasion of Ukraine.

Assets of approximately $55million as of Monday saw the ETF drop to $3.76, a plunge of nearly 61%. On Tuesday, 145,000 RUSL options were traded. According to Trade Alert data, ETF options traded for only 32,000 in the last four years.

A variety of bets were placed into the fund to make money from chaotic Russian-related assets trading. Investors fled assets that had been linked to Russia amid sanctions by the West.

ETFs that are U.S. listed on Russian stocks have been under severe selling pressure over the past few days as investors fled assets related to Russia amid sanctions from the West and allies. The Vaneck Russia ETF shares have fallen more than 65% in the past eight sessions. Tuesday’s slide was about 24%.

“It’s possible traders are taking advantage of the volatility, playing the momentum,” said Susquehanna International Group’s Chris Murphy.

The U.S. listed ETF’s shareholders will be able to receive cash in the form of an undetermined sum of money against their shares on March 18. Direxion released a statement late Monday.

Steve Sosnick (NASDAQ: Chief Strategist at Interactive Brokers) said that he believes it is a gamble. He was also a former options trader. He said that you could “see this thing moving around…up 100%, then down 50% for 10 days.”

The ETF’s implied volatility for the 30-day period was 3420%. This is the highest level since early 2020, when the ETF suffered a pandemic-driven selloff.

According to Garrett DeSimone (head quant at OptionMetrics), some traders bet that the ETF’s final value will drop by March 11.

Murphy stated that it was likely that a lot of trading took place by retail investors looking for quick profits as stocks gyrate wildly.

Murphy explained that it is in keeping the growing trend of retail traders, once obsessed with so-called meme stock, now focusing their attention on securities that track a broader market.

Murphy explained that everything is moving toward the macro and geopolitical Fed. Murphy suggested that retailers may be shifting to macro-focused products as that’s what matters most right now.