Unusual Options Activity: OC, LULU, GLD, And More

options trading activityIt’s time to review some stocks that had unusual options activity over the past 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 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

Tuesday

America Movil SAB (AMX) – The Jan 2016 $17/$22 bull risk reversal was put on 3,500 times for a $0.55-$0.60 debit. Options activity was 6x the average daily volume. This trade involves buying the Jan 2016 $22 calls and selling the Jan 2016 $17 puts to help finance the trade (breakeven point is at $22.55-$22.60).

Owens Corning (OC) – There was a rollout from 7,000 June $43 calls ($0.30 credit) into 7,000 July $43 calls ($0.70 debit). Aug and Nov calls still have sizable open interest from buying earlier this year. On April 22nd, the company reported a $0.06 EPS beat that led Jefferies to raise their price target to $51 from $46.

Ocwen Financial (OCN) – The Jan 2016 $9/$11 bull risk reversal was put on 10,000 times for a $0.23-$0.25 debit. Also, on Wednesday, the same trade was put on another 10,000 times for a $0.25 debit. The stock is down 83% from the 2013 highs, but has sustained closes above the 10-week EMA (50-day exponential moving average) in the last month.

 

Wednesday

Lululemon Athletica (LULU) – The June 19 $61/$66 bull call spread was put on 5,000 times for a $1.77 debit. Lululemon earnings are due out on June 9th (it has moved up on 4 of the last 5 reports).

Navistar International (NAV) – A rollout from 20,000 July 17 $29 puts ($2.50 credit) into 23,000+ Oct $27 puts ($2.50 debit). Earnings are due out in early June (shares have moved lower after earnings on 5 out of the last 7 reports). The next major support level for NAV is in the $25.00-$25.50 area (June 2013 bottom).

 

Thursday

SPDR Gold Trust ETF (GLD) – There was a rollout from 100,000 June 19 $120 calls ($0.13 credit) into 100,000 June 19 $117.50 calls ($0.37-$0.38 debit). He/she is paying an additional $25,000 to roll down their call position (last traded above $117.50 on May 18th). On average, less than 60,000 calls trade per day on GLD. Keep an eye on Gold.

SPDR S&P Oil & Gas Exploration & Production ETF (XOP) – The June 12 weekly $45/$47 bear put spread was put on 5,000 times for a $0.53 debit. Intermediate-term support is in the $45.80-$47.00 range. Clean Energy Fuels, EP Energy, Energy XXI, Laredo Petroleum, and Range Resources are the top five holdings in the ETF (8.89% weighting).

 

Friday

Cigna (CI) – The July $130/$150/$160 bull call spread risk reversal was put on 1,000 times for a $0 debit. Losses on this trade don’t occur until the stock moves below $130; above $150 for profits on the spread. Aetna and Cigna are considered the two companies in the running to acquire Humana.

Michael Kors (KORS) – Over 4,000 Aug $50 calls were bought for $1.70-$1.95, against open interest of 3,654 contracts. On Thursday, Jan 2017 $50 calls were purchased for $6.70. These trades are betting on a rebound in the beaten luxury retailer (more than cut in half since February of 2014). The stock trades at a P/E ratio of 10.57x (FY16 estimates), price to sales ratio of 2.09x, and a price to book ratio of 4.08x.

SeaWorld Entertainment (SEAS) – There was sizable buying in the June $21 puts (2,000+ traded), June $22 puts (2,200+ traded), and July $21 puts (1,800+ traded). Put activity was 5x the average daily volume. On May 28th, 3,000 Sep $21 calls were sold for $1.30 (they paid $1.35-$1.45 on April 20th). The company just went through a CEO change in April and just last week replaced the CFO.

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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