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
Fastenal (FAST) – There was a rollout from 5.000 Sep $40 puts ($2.50 credit) into 5,000 Sep $38 puts ($1.40 debit). Also, there was a rollout from 5,000 Sep $40 puts ($2.55 credit) into 5,000 Sep $37 puts ($1.05 debit). Earlier that day, Baird downgraded Fastenal (FAST) to neutral from outperform.
Market Vectors Oil Services ETF (OIH) – There was a rollout from 34,000 Oct 16 $29 puts ($2.58 credit) into 45,000 Oct 16 $26 puts ($1.26 debit). They paid $1.19 for Oct 16 $29 puts on August 4th. On August 13th, 10,000 Sep 18 $30 puts were bought for $0.81-$0.86 as well. The recovery in oil prices and the Cameron International takeover helped the Oil Services ETF, but the multi-month downtrend in OIH is still in place.
Tuesday
Starwood Hotels & Resorts Worldwide (HOT) – There was a rollout from 20,000 Sep $80 calls ($0.58 credit) into 20,000 Sep $75 calls ($1.76 debit). Starwood Hotels (HOT) briefly dipped below the long-term support level at $70 on Monday, but was able to finish higher on the week. HOT trades at a P/E ratio of 21.56x (2016 estimates) and a price to sales ratio of 3.91x. Sales growth and double digit earnings growth are projected to return next year.
Wednesday
Generac (GNRC) – 1,500+ Sep $30 calls were bought for $0.64-$1.10. Call activity was 16x the average daily volume. On August 6th, the company missed Q2 estimates and issued weak FY15 guidance. Generac authorized a $200M share repurchase program. The stock has been crushed lately, but heading into the hurricane and winter season this could see a nice bounce off of the lows.
McDonald’s (MCD) – The Oct 16 $95/$100 1×2 ratio bull call spread was put on 10,000 times for a $0.60 debit. $100 has been the ceiling for McDonald’s (MCD) since last year. McDonald’s management has been trying to bring back growth to the fast food giant via a new CEO, smaller menu, improving drive thru speed, and by using less preservatives/additives in their food.
Thursday
Incyte (INCY) – The Jan 2016 $135/$165 bull call spread was put on 5,000 times for a $6.00 debit. They have Phase 2 and 3 trial data due out next year. On August 18th, Argus upped their price target on Incyte stock to $135 from $125.
Tetraphase Pharmaceuticals (TTPH) – 1,000 Sep $45 calls were bought for $4.20, against open interest of 2,015 contracts. Tetraphase Pharmaceuticals has Phase 3 trial data due out by the end of September. Short interest is 7.5% of the float.
Friday
Ascena Retail Group (ASNA) – 7,254 Sep $12 puts were bought for $0.60. Also, there was sizable buying in the Oct $11 puts (1,200+ traded) and Oct $12 puts (4,300+ traded). On August 27th, 4,000 Oct $12 puts were bought for $1.00-$1.15. Earnings are due out on September 21st. Back in May, the owner of Lane Bryant and Dressbarn agreed to acquire Ann Inc (Ann Taylor and Loft brands) for $2.16B.
Lumber Liquidators (LL) – 2,500 Jan 2016 $15 puts were purchased for $3.39-$3.40, against open interest of 10,684 contracts. 10,000 were bought on August 27th as well. Shares of Lumber Liquidators (LL) are off of the August lows, but negative press/potential lawsuits still loom over the company. Analysts only see the hardwood flooring company earning $0.29 per share next year (was closer to $1.50 per share earlier in the year), which is a fraction of last year’s $2.31.
TrovaGene (TROV) – The Jan 2016 $7.50/$10 bull call spread was put on 2,500 times for a $0.50 debit. He/she has the potential to make 300% if the stock can return to level it was at just less than 2 months ago ($10). Leerink Swann initiated TrovaGene (TROV) with an outperform rating and a $9 price target on August 14th. According to the Leerink report, “TROV is an early stage pure play in the cancer liquid biopsy market, a market with the potential in our view to be the largest in molecular diagnostics.” The analyst believes that there could be large market opportunity for the company’s products, while seeing TrovaGene as an early mover that has unique capabilities. While early studies have validated the test performance of the company’s pipeline products, more data is expected going forward. For now, the early performance of these product, when compared to the company’s plan, indicate clinical interest. The management team has already assembled to address the market opportunity.
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.
