EWZ – iShares MSCI Brazil Index ETF – A three-legged options combination strategy implemented on the iShares MSCI Brazil Index Fund today implies one investor is taking a long-term bearish stance on the ETF. Shares of the EWZ, an exchange-traded fund designed to provide investment results that correspond to the price and yield performance of publicly traded securities in the aggregate in the Brazilian market, declined 2.30% to $62.66 just before 12:45 pm (ET). It appears the pessimistic player sold call options in order to offset the cost of buying a plain-vanilla debit put spread in the December contract. The investor purchased 10,000 now in-the-money puts at the December $63 strike for an average premium of $7.77 apiece, and sold the same number of puts at the lower December $53 strike for an average premium of $3.97 each. Finally, the third leg of the trade involved the sale of 10,000 calls at the December $73 strike for a premium of $3.00 a-pop. The net cost of establishing the pessimistic play is reduced to just $0.80 per contract. Thus, the investor is positioned to amass maximum potential profits of $9.20 per contract if shares of the EWZ plummet 15.4% from the current price of $62.66 to breach the $53.00-level by expiration in December. The trader starts to make money as long as shares trade below the average breakeven point to the downside at $62.20 by expiration. The short sale of the calls provide added financing for the investor, but also expose him to potentially devastating losses in the event that shares of the fund rebound sharply in the next several months. Losses accumulate if shares of the EWZ rally above $73.00 ahead of expiration day. The parameters of the trade and the risks involved in holding such a position suggest perhaps that the investor responsible for the transaction is long shares of the underlying stock. This would indicate the combo-play serves as immediate downside protection in a volatile market and suggests the investor is happy to have the shares called away at $73.00 each should the calls land in-the-money at expiration, which the trader apparently does not think is a likely outcome.