CORN, EFA Options – Unusual Trading Activity – August 16, 2013
This week we’re taking a look at unusual options trading activity in Teucrium Corn (CORN) and iShares MSCI EAFE Index (EFA).
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:
Teucrium Corn (CORN)
One trader thinks this week’s bounce in corn prices isn’t going to hold.
CORN is currently trading for $35.92 per share. The shares are down 19% year-to-date but climbed over 3.5% in one trading session this week. The current price is just 5% above the 52-week low of $34.05 and 32% below the 52-week high of $52.71.
An investor sold nearly 500 September $36 calls for $0.85. That may not sound like a lot, but CORN isn’t super active in terms of options. Open interest was also just 690 contracts at the time of the trade.
The strategist is basically selling at the money calls and expects the price of corn to stay where it is or drop by September expiration. It’s possible these calls are tied to another product, such as corn futures, but not likely given the nature of the ETF.
iShares MSCI EAFE Index (EFA)
At least one strategist believes developed market stocks aren’t going to fall much further by October expiration.
EFA, the most popular developed market stock ETF, is currently trading for $61.58. The shares are up 24% from the 52-week low of $49.56 and are just 2% below the 52-week high of $62.87.
This particular put trade is buying the September 56 puts at $0.19 roughly 7,600 times. At the same time, 8,700 October 60 puts were sold at $1.21. Because the September options were bought so cheaply, this is likely a closing position.
As such, it implies the trader is rolling up the 56 strike to 60 and establishing a new bullish/neutral position. The September buyback is a way to close the trade and potentially collect (at least some) profits.
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
