Unusual Options Activity: CBS, MA, MU, RHT, And More

unusual options activityIt’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 (or who is making them), I believe that it’s important to be aware of notable options activity as another 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

Monday

Red Hat (RHT) – The Sep $85/$90 bull call spread was put on 5,000 times for a $1.10 debit. This was done another 5,000 times for a $1.10 debit about hour after the first big trade. Call activity on RHT was 11x the average daily volume. Following Red Hat’s Q1 earnings beat two weeks ago, the stock had been trading just below key resistance at $80 and is currently retesting the 50-day exponential moving average.

Tuesday

AVG Technologies (AVG) – 2,600+ Aug $30 puts were purchased for $2.45-$2.55 (accounts for more than half of total put open interest). On average, just 52 puts trade per day. In 9 months the stock has rallied $8 as the RSI reading of 79+ pushes toward 2 year highs.

Avago Technologies (AVGO) – The Mar 2016 $100/$125/$165 bear put spread risk reversal was put on 6,000 times for a $0.25 credit. This is a form of a hedge strategy against a long stock position (allows upside to $165, but protects the holding below $125 and down to $100). Shares of the semiconductor device maker have almost doubled since October, so for someone sitting on large gain this one way to stick with a position and collect a little premium as well.

Wednesday

Mastercard (MA) – 20,000 Jan 2016 $90 puts were sold for $3.20-$3.45. On June 26th, Goldman Sachs reiterated their buy rating on Mastercard (MA), the second largest credit company in the U.S.  Growth opportunities await the likes of Visa and Mastercard in China where other competition will be allowed in the coming years (previously just been China UnionPay).

Sanchez Energy (SN) – 5,000 Aug $10 puts were bought for $0.80-$0.90. Implied volatility rose 15.1% to 63.74. They are expected to lose more than $2 in EPS this year and next year. The stock trades at 0.90x sales and 1.14x book value.

Thursday

CBS Corp (CBS) – The July 17 $54/$57 bear put spread was put on 10,000 times for a $0.70 debit. CBS stock had been in an uptrend since October, but that ended this month.

C&J Energy Services (CJES) – There was a rollout from 5,000 July $14 puts ($1.20 credit) into 5,000 Aug $13 puts ($1.20 debit). The oil services company could retest $11 soon, following the recent break below support at $13.50. EPS trend revisions for 2015 and 2016 continue to worsen (-$0.24 to -$1.53 for 2015 in just 3 months).

Friday

Avon Products (AVP) – 20,000 Aug 21 $6 puts were purchased for $0.35. Put activity was nearly 4x the average daily volume. The stock has been trading in downtrend for quite some time

Ball Corp (BLL) – Roughly 12,700 Feb 2016 $72.50 calls were purchased for $5.10-$5.50. Call activity was 74x the average daily volume. This was tied to 675,000 shares. They are in the process of buying Rexam (would be a combination of the 2 largest beverage can makers in the world).

Micron Technology (MU) – There was a likely rollout from 23,000 July 17 $25 calls ($0.02 credit) into 11,500 Jan 2016 $26 calls ($0.58 debit). Volume was below the open interest in both options. Also, there was a likely rollout from 10,000 Jan 2016 $27 calls ($0.36 credit) into 10,000 Jan 2016 $24 calls ($0.85 debit). Micron (MU) reported worse than expected Q3 results on June 25th. These traders are giving themselves more time amid the unexpected collapse below $20.

Thanks for reading and have a great week!

 

Twitter:  @MitchellKWarren

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.

 

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