Brazil ETF Call Option Open Interest Reaches Record $20 Billion Amid Election Uncertainty

Call option open interest on the iShares MSCI Brazil ETF (EWZ) has surged to approximately 5.2 million contracts, representing about $20 billion in notional exposure. This marks the highest level of open interest since 2007, nearly doubling in just a matter of days. As of early September 2026, this figure increased by roughly 86% from about 2.8 million contracts recorded on August 24, reflecting a significant surge in bullish bets on Brazilian equities.

The ETF has seen a notable increase of around 15% during this period, contributing to a year-to-date gain of approximately 19%, outpacing the performance of the Nasdaq-100 in certain timeframes. Daily options volume has spiked to more than six times the 30-day average at various points in early September, with most activity concentrated in call options. The most popular trades are focused on out-of-the-money strike prices at $43 and $45, with expiration dates set for November 20, 2026, accounting for about 1.37 million contracts.

The surge in options trading is largely attributed to shifting dynamics in Brazil's 2026 presidential election, where Flávio Bolsonaro, a senator from the Liberal Party and son of former president Jair Bolsonaro, has been gaining ground against incumbent Luiz Inácio Lula da Silva. What was once perceived as a comfortable lead for Lula has tightened, creating uncertainty in the market. The focus on options expiring after the election indicates that traders are looking to maintain exposure through the electoral timeline, which includes a potential runoff in late October.

As implied volatility on EWZ options rises alongside the increase in open interest, the call-to-put skew is at extreme levels historically. However, the $20 billion in notional exposure also presents risks, as out-of-the-money options can decay quickly as expiration approaches, and the significant gap between the current price and popular strike prices means that time is a critical factor for latecomers to this trade.

© 2026 KLEA News. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Source: KLEA News