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 my weekly recap of 10 stocks that saw unusual options activity and what, if any, significance these trades may have.
Unusual Options Activity: 10 Stocks With Notable Trades
Hanesbrands (HBI)- Roughly 3,000 July $32.50 calls were bought for $0.65. Call activity was 6x the average daily volume. There was sizable buying in these calls and the Oct $32.50 calls on Tuesday as well. Hanesbrands (HBI) is off about $2.50 from its highs, but the long-term uptrend remains intact. On May 15th, DA Davidson upgraded the stock to buy with a $37 price target.
Michael Kors (KORS)- The May 29 weekly $57.50/$61 bear put spread was put on 2,500 times for a $1.65 debit. Michael Kors (KORS) is scheduled to report earnings on May 27th (shares have moved lower after earnings on 3 straight reports). The May 29 weekly $57/$62 bear put spread was put on 2,500 times for a $1.59 debit on May 12th.
General Electric (GE)- Roughly 14,000 July $28 calls were bought for $0.31-$0.34, against open interest of 15,734 contracts. Open interest now stands at 32,053 contracts. The buyer of 125,000 Jan 2017 $30/$35 bull call spreads on February 27th remains long. GE is in the process of shedding real estate assets for $26.5B and shrinking the GE Capital unit. These asset sales will go toward a multi-year $50B share repurchase program.
Tiffany & Co. (TIF)- The June $80/$87.50/$92.50 bull call spread risk reversal was put on 2,500 times for a $0.64 debit. Earnings are due out on May 27th (shares of TIF have moved higher after earnings on 4 out of the last 6 reports). Tiffany and Co. have traded sideways for much of 2015 so this week’s earnings could be a catalyst for a directional move.
Southwest Airlines (LUV)- There was large buying in the July $37 puts (14,900+ traded) and July $38 puts (4,300+ traded). Put activity was 8x the average daily volume. Management for Southwest Airlines (LUV) said on May 20th that they see revenue per available seat down 3% this year. Higher capacity and competitive pricing from other airlines have helped push the stock lower.
SouFun Holdings (SFUN)- 20,000 Nov $5 puts were sold for $0.20. 66,000+ Nov $6 puts were sold to open on April 23rd, April 30th, and May 4th. The stock bounced at the 50-day moving average last week, following a FY15 EPS guidance raise and a 75% increase in Q1 e-commerce sales.
Hilton Worldwide (HLT)- 5,000 Oct $29 calls were purchased for $2.14-$2.15. Large open interest remains in the Jan 2016 $35 calls (went from 177 on April 10th to 23,246 contracts on April 21st). Back in October they sold the historic Waldorf Astoria New York hotel for $1.95B to a Chinese insurance company. Given all of the bullish order flow in the last two months, I’d look for more deals from Hilton Worldwide (HLT) to come during the next two quarters.
Atmel (ATML)- 3,000 Aug $8 calls were purchased for $1.15-$1.25, against open interest of 11,201 contracts. Shares are nearing another retest of the $9 resistance level. On May 7th, Needham reiterated their buy rating and $11 price target.
GNC Holdings (GNC)- The Sep $42.50/$47.50 bull risk reversal was put on 2,500 times for a $0.45 debit. Options activity was 6x the average daily volume. 2,000 June $42.50 calls were bought on April 30th and large open interest remains in the Jan 2016, 2017 $47.50 calls from buying this month. It is important to note that the June action came after the disappointing Q1 results and outlook from the company, so recent options activity could be signaling an activist is building a position.
Infosys (INFY)- There was a rollout from 6,000 June $30 puts ($0.15-$0.21 credit) into 4,000 July $31.25 puts ($1.30-$1.31 debit). Earnings aren’t expected to grow much at all this year and analysts continue to revise lower their full year estimates. The stock has recovered in the last week, but overhead resistance is still in the $32-$33 range.
Thanks for reading and have a great week!
Follow Mitchell on 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.