AMLP, MRVL Options – Unusual Trading Activity – May 31, 2013
This week we’re taking a look at unusual options trading activity in Alerian MLP ETF (AMLP) and Marvell Technology (MRVL).
As many of you know, unusual options volume can be a valuable indicator as to what traders are thinking, and more importantly, where these stocks are heading in the short-term.
This is something professional options traders pay a lot of attention to, and for good reason… Unusual options activity can “tip off” big moves in a stock, either up or down.
So let’s take a look at some ‘interesting’ activity that caught our eye this week:
Alerian MLP ETF (AMLP)
At least one trader is either expecting a downturn in MLPs or is doing some serious hedging. This week, a large amount of puts traded in the MLP ETF, AMLP.
AMLP is currently trading at $17.55 and is down 3% for the week. But for the year, the stock’s still up over 13%. Shares are trading 21% off the 52-week low of $14.51 and are just 3% below the 52-week high of $18.14.
A trader bought the July 17 and 18 puts 4,500 times for a combined price of $0.90. Later on, 8,250 July 18 puts were purchased for $0.60. As I mentioned, this trade could be a bearish play on MLPs or a significant hedge.
By the way, when a trader buys or sells multiple strikes of a spread at the same time, it has the colorful name of a call or put stupid. This week’s AMLP trade was a put stupid.
Marvell Technology (MRVL)
A large put spread trade occurred this week in semiconductor company, Marvell.
MRVL is currently trading for $11.05. The shares are up 52% year-to-date, but are down 3% for the week. The stock price is 58% above the 52-week low of $6.98 and 13% below the 52-week high of $12.69.
A large, very narrow put spread was purchased in MRVL, suggesting one strategist believes the stock’s going to drop a bit further by mid-July.
The trader bought the July 10/11 put spread for $0.30. That means the maximum potential gain on the trade is $0.70 should the shares close at $10 or below at July expiration. The total risk on the trade is just the $0.30 of premium paid.
More Options Ideas…
That wraps up this week’s unusual options trading and volume…
Keep in mind, there’s a lot more unusual options activity going on than what we discuss here.
We just try to bring you what we feel are the most significant ones– and the ones you might actually be able to make some money on!
So keep an eye on your email inbox… we have a lot more options trading ideas coming your way!
Yours in Profit,
Gordon Lewis
Category: Unusual Options Trading Activity
