It’s Sunday night so it’s time to review several stocks that had unusual options activity over the last week. Although traders can never be sure why these trades take place (and who’s making them), I believe it’s important to be aware of notable options activity as an indicator for directional bias.
Here’s a weekly recap of 10 stocks that had unusual options activity and what, if any, significance these trades may have.
Unusual Options Activity: 10 Stocks With Notable Trades
Anadarko-Petroleum (APC) – The Jan 2016 $90/$110/$130 call butterfly was put on 5,000 times for a $3.29 debit. This trade can be worth up to $20 on a close at $110 on Jan 2016 options expiration.
Medtronic (MDT) – 4,600 July 10 weekly $74 puts were sold for $0.88-$0.89. Medtronic reported better than expected Q4 results that morning. Put sellers continue to target the company on pullbacks (bouncing at the 100-day SMA today).
Brinker International (EAT) – The Jan 2016 $50/$60 bull risk reversal was put on 1,000 times for a $0.70 debit. On May 29th, the Oct $50/$60 bull risk reversal was put on 1,000 times for a $0.08 credit. On May 14th, Miller Tabik upgraded the owner of Chili’s and Maggiano’s to buy from hold; raised their price target to $65.
United Parcel Service (UPS) – Over 6,000 July 17 $105 calls were bought for $0.58-$0.72, against open interest of 20,438 contracts. Call activity was 3x the average daily volume. Goldman Sachs upgraded UPS to buy from neutral with a $119 12-month price target on May 15th. They see better than expected results (especially from ground segment pricing), which could lead to a higher earnings multiple closer to 21x. Keep an eye on UPS.
Atmel (ATML) – There was sizable buying in the Aug $10 calls (6,900+ traded), Aug $11 calls (6,600+ traded), and Nov $11 calls (3,800+ traded). Also, 10,000+ July $10 calls traded with the majority being bought for $0.25-$0.30 later in the session. The bullish option order flow helped push the stock above the $9 resistance level. FBR has Atmel as a top candidate to be acquired in the semiconductor space (outperform rating and a $10 price target).
Michael Kors (KORS) – Another 2,000+ Aug $50 calls were purchased for $2.40-$2.45, against open interest of 8,244 contracts. Open interest was just 22 contracts on May 27th. Traders have been piling into call positions (up to the Jan 2017 expiration) following KORS disappointing earnings report in May.
Aetna (AET) – The Oct $100/$130 bull risk reversal was put on 1,500 times for a $0.62 debit. Aetna and Cigna are the two leading suitors for a takeover of Humana according to the WSJ.
Momo (MOMO) – 2,000 June $17.50 puts were bought for $1.25-$1.30. Put activity was 9x the average daily volume. Shares are up 80% in the Chinese social networking company, so traders could be hedging gains or making a direct bet on a near-term pullback soon.
Restoration Hardware (RH) – The June $95/$100 bull call spread was put on 5,000 times for a $1.30 debit. Restoration Hardware (RH) earnings are due out on June 10th (shares have moved higher after earnings on 4 out of the last 5 reports).
Wal-Mart Stores (WMT) – A rollout from 10,000 July 17 $75 calls ($0.75 credit) into 10,000 Dec $80 calls ($1.13 debit). Shares of the largest supermarket chain are down nearly 19% from the January highs. Walmart (WMT) trades at a P/E ratio of 15.28x and 0.49x sales.
Thanks for reading and have a great week!
No position in any of the securities mentioned at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.