Charles Schwab Options (SCHW): Unusual Trading Activity
Options on brokerage giant Charles Schwab (SCHW) are lighting up our tracking system this morning with a large amount of trading activity.
But before I jump into the details, let me say this…
The market’s recent action is enough to give anyone a headache. What’s worse, there’s no one to give investors a clear opinion on what they think about investing for the short-term or long-term.
And how can they?
May has turned out to be a record breaking month… and not in a good way.
First off, there haven’t been two back to back days in May that have closed in the green. This alone is hard to fathom.
What’s more, the market has only been up a total of four days for the entire month. It’s the first time this has happened in any month dating all the way back to 1974.
And this is why it makes it so confusing and frustrating for investors and traders alike.
Now, let’s get back to this morning’s large options trade…
With Charles Schwab trading down 1.2% today at $12.27 a share, one option trader came in and purchased 2,700 call options at $0.50 a piece.
The trade cost him a total of $135,000. And since he executed this speculative trade without using any other options or stock, he now has unlimited upside potential until June expiration.
What’s so appealing about this stock?
As many of you already know, Charles Schwab is best known for its discount-brokerage business.
Since its beginning, the firm and founder have spread the gospel of cheaper cost investing.
And today, Schwab remains a major force in personal investing. The company boasts a large network of brick-and-mortar brokerage branch offices. And their online investing platform is preferred by millions of investors.
But these days Charles Schwab is about much more than just the cheap trade and the “talk to Chuck” motto.
Schwab’s recent earnings have primed SCHW for a boost once the Federal Reserve starts raising rates.
The company just acquired on-line trading platform, optionsXpress. This will give SCHW a stronger position in its profitable segment of the online-trading business, especially its options investing.
In addition, Schwab’s scalable pricing model should enable them to pocket higher profits as revenues continue to grow.
But here’s the most important part… the chart.
Schwab is one of the few financials that has been able to hold support near its 200-day moving average during the recent sector-wide bloodbath. The stock’s resilience during this downturn is a good sign it will outperform when the market starts moving higher again.
No wonder traders are positioning for a strong upside rally.
Best of all… it’s an inexpensive way to take this positive information and run with it.
And I think these options traders will be handsomely rewarded!
For more detailed information on unusual options activity and how you can profit from it, be sure to sign-up for our daily newsletter, Options Trading Research. It’s always 100% free and packed full of option trading ideas you can use immediately in your own portfolio. Click here to subscribe for free.
Safe Trading,
Marcus Haber
Category: Unusual Options Trading Activity
