Unusual Options Activity: FCX, POT, QCOM, XOM, And More

unusual options activityIt’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

Tuesday

Freeport-McMoRan (FCX) – 10,000+ Sep 18 $10 puts were purchased for $0.89-$0.92, against open interest of 5,852 contracts. Freeport-McMoRan stock (FCX) dropped for the 8th consecutive week amid weakness in the energy markets.

QUALCOMM (QCOM) – The Oct 16 $60/$62.50 strangle was put on 10,000 times for a $2.79 debit. He/she is making a long volatility bet on QCOM moving above $65.29 or below $57.19 by October options expiration.

 

Wednesday

iShares JPMorgan USD Emerging Markets Bond Fund ETF (EMB) – 2,000 Sep $107 puts were purchased for $1.15. The Emerging Markets bond fund ETF is beginning to fall through support at the $107.50-$108.00 level.

Potash (POT) – The Jan 2017 $20/$25 bear put spread was put on 6,000 times for a $2.09 debit. This was part of a rollout from Jan 2016 puts. Potash (POT) earnings aren’t likely to grow on a year over year basis, which might be the best case scenario given the continued downward revisions in analyst estimates. Here’s my analysis of Potash from August 20th.

Exxon Mobil (XOM) – 50,000 Jan 2016 $60 puts were bought for $0.67-$0.69. XOM put activity was 7x the average daily volume. XOM’s earnings are projected to collapse 40% this year (-30%+ for revenue too).

 

Thursday

Peabody Energy (BTU) – There was sizable buying in the Sep 4 weekly $2 calls (10,000+ traded) and Sep 18 $1.50 calls (25,000+ traded). Recently, George Soros announced he took a position in the beaten down coal miners, BTU and Arch Coal (had call buying on August 19th).

Market Vectors Semiconductor ETF (SMH) – 10,500 Feb 2016 $55 calls were bought for $1.00. Probably more notable ater in the day, there was a rollout from 9,000 Nov $54 puts ($5.85 credit) into 22,000 Nov $47 puts ($1.85 debit). He/she was taking some profits, but still sees additional downside risk into year’s end (bottomed at $43.92 in October 2014). Top holdings in the ETF include Intel (19.07% of assets), Taiwan Semiconductor (15.58%), ASML Holdings (6.02%), and Texas Instruments (had a buyer of 12,500 Sep 18 $50 puts on the same day).

 

Friday

Delphi Automotive (DLPH) – There was a rollout from 3,454 Aug $75 puts ($1.55 credit) into 2,500 Sep $70 puts ($1.75 debit). Overall weakness in the stock market and automotive sector resulted in a break down below the $74.70 level. The next major support level for DLPH is in the mid-$60’s.

Heron Therapeutics (HRTX) – 5,000 Oct $40 calls were bought for $4.40-$4.50. More than 18,000 still seats in open interest in the Sep $35 calls. Shares are nearing a retest of the $37 resistance level. On August 19th, JMP Securities upped their price target to $40 from $38.

Textron (TXT) – Over 4,000 Sep $40 puts were bought for $1.27-$1.32, against open interest of 2,294 contracts. Shares have been moving lower, but the stock doesn’t trade at a cheap valuation (15.90x 2015 earnings). On July 28th, Textron reported that Q2 sales were down 8.6% on year over year basis. FY15 EPS guidance came in at $2.30-$2.50 vs. analyst estimates of $2.51.

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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