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
Monday
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.
Tuesday
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.
Wednesday
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).
Thursday
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.
Friday
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!
Twitter: Â @MitchellKWarren
No position in any of the securities mentioned at the time of publication. Â 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.
