ARUN, VIX Options – Unusual Trading Activity – November 20, 2013
This week we’re taking a look at unusual options trading activity in Aruba Networks (ARUN) and CBOE S&P 500 Volatility Index (VIX).
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:
Aruba Networks (ARUN)
At least one investor believes networking company, ARUN, is going south over the next month.
Aruba is currently trading for $16.88 per share and is down 19% for the year. The share price is 36% above the 52-week low of $12.38 and is 37% below the 52-week high of $26.78.
Over 3,000 puts traded at the December 17 strike for $1.25. Open interest was only around 400 contracts, so this is clearly a new position. The trade will be maximized if ARUN closes at $15.75 or below on December expiration.
Aruba is reporting earnings on November 21, so this could be a bet that the results will disappoint. Or, perhaps an investor is long ARUN shares and wishes to protect against the downside in the event of a negative earnings surprise.
CBOE S&P 500 Volatility Index (VIX)
The pace of call buying continues at a breakneck rate in the VIX.
The VIX benchmark volatility index is trading at $13.39. The index is trading 17% above the 52-week low of $11.05 and 41% below the 52-week high of $22.72.
The super active VIX saw a couple massive call trades occur this week. Over 90,000 March 23 calls traded for $1.30. And, over 85,000 February 20/28 calls spreads traded as well.
In both cases, they are likely bullish bets on volatility. As I’ve stated before, a lot of volatility action seems to be occurring around that February/March time frame next year, most likely due to political uncertainty surrounding the debt ceiling and budget.
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
