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
Oasis Petroleum (OAS) – 5,000 Nov $12 calls were purchased for $1.00-$1.20, against open interest of 3,266 contracts. On August 6th, Wunderlich upgraded Oasis Petroleum (OAS) to a “buy” and raised their price target to $14 from $11.
PMC-Sierra (PMCS) – There was a rollout from 24,000 Jan 2016 $10 calls ($0.02 credit) into 24,000 Jan 2016 $8 calls ($0.25 debit). On July 23rd, they announced plans to reduce annual spending by 14% ($40M each year). This is a sizable amount for PMC-Sierra, a $1.25B company.
iShares MSCI USA Minimum Volatility Index Fund (USMV) – 2,250 Sep $41 calls were bought for $1.35-$1.40. This is low volatility U.S. equity ETF that has a 1.81% dividend yield. Last week, USMV broke out above the $42 resistance level.
Gap (GPS) – There was a rollout from 11,228 Sep 18 $35 puts ($1.04 credit) into 33,000+ Sep 18 $34 puts ($0.72-$0.84 debit). On August 10th, Gap reported a small decline in July comps and issued weak Q2 guidance. That has weighed on the stock price.
JD.com (JD) – 9,500 Sep 11 weekly $25.50 puts were purchased for $0.80-$0.85. On August 7th, JD.com topped Q2 estimates, but the Q3 guidance (mid-point) was slightly below Wall Street estimates. Alibaba is going more heavily into electronics (JD.com’s primary market). The stock is breaking down through the $29 support level and the 200-day simple moving average.
Marathon Oil (MRO) – 9,000+ Jan 2016 $16 puts were bought for $1.17-$1.18, against open interest of 5,324 contracts. On August 10th, Oppenheimer downgraded Marathon Oil (MRO) to “perform” from outperform. This came after the oil company reported a 47.9% drop in Q2 revenue and EPS of -$0.23 per share.
Tiffany & Co (TIF) – The Sep $92.50/$100 bull call spread was put on 3,500 times for a $1.95 debit. Quarterly results from Macy’s hurt the stock that day, but Tiffany’s will release their own report on August 27th (shares of TIF have moved higher after 6 out of the last 7 reports).
Energy Select Sector SPDR Fund (XLE) – Another 10,000+ Sep 30 quarterly $64 puts were bought for $0.86-$0.87, against open interest of 70,680 contracts. Roughly 80,000 of these puts have been bought in about a week’s time. Exxon Mobil, Chevron, Schlumberger, Kinder Morgan, and EOG Resources are the top holdings in the energy ETF.
Baxalta (BXLT) – 1,000 Sep $40 calls were purchased for $2.00, against open interest of 4,690 contracts. Also, the Feb $35/$40 bull risk reversal was put on 2,350 times for a $1.50 debit on August 13th. On August 4th, Shire made a $30.6B offer for BXLT (current market cap of $26.7B). Now there are rumors of a $50 per share offer.
L Brands (LB) – There was a rollout from 4,500 Aug $80.50 puts ($1.55 credit) into 4,500 Sep $80 puts ($2.30 debit). On August 12th, BMO Capital downgraded the parent company of Victoria’s Secret and PINK to “market perform” from outperform and cut their price target on LB to $76 from $103. The analyst cited flat operating margins for the rest of the year at Victoria’s Secret, difficult comps vs an excellent 2014, and a rich valuation. Earnings are due out on August 19th (shares dropped marginally on the last 2 reports).
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.