‘Lottery ticket’ call options saw big losses on Brexit

Emerging market trades dropped more than 80% after 'leave' vote

Traders rue ill-fated options bet

In the aftermath of the Brexit vote, a "lottery ticket" call option bet on emerging markets has caught the eye of traders – for all the wrong reasons.

Demand for out-of-the-money upside call options on the iShares MSCI Emerging Markets ETF (EEM) spiked fourfold on Thursday, June 23 – the day of the referendum. "We saw 275,000 July calls on the tape by 10am [Eastern Time] on Thursday morning. That's a lot of calls," says a portfolio manager at a US asset management firm in New York.

A New York-ba