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
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: 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.
