COH, LEN Options – Unusual Trading Activity – October 13, 2014
This week we’re taking a look at unusual options trading activity in Coach (COH) and Lennar (LEN).
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:
Coach (COH)
A large trade in COH suggests the luxury apparel maker has limited upside in the coming year.
COH is currently trading for $34.61. The price is just 5% above the 52-week low of $33.08 and is 38% below the 52-week high of $56.21.
Today, a large block of over 9,400 May 36 calls traded for $2.50 per contract. Open interest was almost zero, so this is clearly an opening trade.
It’s highly likely this is a large covered call trade, with the block of calls sold against long stock. Basically, the trade is maximized if the share price is right around $36 next May. In that case, the trader will collect the entire $2.50 premium plus nearly $1.50 in stock price appreciation.
Lennar (LEN)
At least one construction company could be set to move higher by next January.
LEN is trading for $38.52. The shares are 13% below the 52-week high of $44.31 and 20% above the 52-week low of $32.05.
A trader purchased a whopping 30,000 January 42 calls for $1.44 per contract. That’s obviously a very large bullish bet – costing the buyer a cool $4.3 million.
The stock will have to climb over $43.44 by next January for these calls to make money. That’s just under the 52-week high, so clearly the trader is very bullish about a turnaround in this construction giant.
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
