ANR, GPS Options – Unusual Trading Activity – March 24, 2014
This week we’re taking a look at unusual options trading activity in Alpha Natural Resources (ANR) and Gap (GPS).
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:
Alpha Natural Resources (ANR)
A strategist believes ANR may finally be coming out of its long, downward slide.
ANR, a once prominent coal producer, is currently trading for $4.52. The price is just 8% above the 52-week low of $4.19 and is 47% below the 52-week high of $8.50.
Recently, a trader purchased 20,000 January 2015 5/7 call spreads for $0.48. That is, the trader bought the 5 calls and sold the 7 calls. The trade is maximized if ANR closes at or above $7 by next January’s expiration.
The trade is cheap because the stock price is so low – that is, it would be quite a large move in relative terms. The strategy does make sense given how beat up the coal industry has been. At some point, the bleeding will stop and prices will level out.
Gap (GPS)
Is Gap going to hold above $40? At least one trader thinks so.
GPS, the popular apparel store, is trading for $41.09. The shares are up 20% from the 52-week low of $34.10 and are 11% below the 52-week high of $46.09.
Today, roughly 5,000 April 40 puts have been sold so far for around $0.44. As such, this trade will be profitable if GPS closes at or above $39.56 per share on April expiration.
The average daily volume is just around 1000 contracts, so this is unusual option activity for this name. Most likely, traders believe GPS will hold because of the strong support below the current price. Both the 200-day and 50-day moving average converge between $40 and $41.
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
