Corning Options (GLW): Unusual Trading Activity

| April 26, 2012 | 0 Comments

GLW OptionsOptions in glass maker Corning (GLW) are lighting up our screen again today with a large amount of unusual trading activity.

The famous TV screen manufacturer released earnings yesterday which were in-line with analysts’ expectations.  And with the broad market substantially higher yesterday, GLW followed suit climbing from $13.40 to $14.20 a share this morning.

So, what are option traders doing?

It’s a bit unusual for us to see such enormous option activity after a release.

After Corning’s earnings yesterday, a gigantic option trade came in on the call side.  Probably one of the largest single trades ever for this company.

This option trader executed an order to purchase 85,000 contracts of the GLW January $17.50 strike call options for an average price of $0.40 a share.

Remember, buying call options is a strategy used when you think a stock is going to move higher.

That’s quite a trade!

So, what’s on this option trader’s mind?

Back to that in just a moment…

If you don’t already know, Corning is the leading designer and manufacturer of glass displays.  Corning’s glass display business accounts for almost 40% of its total revenue.

However, they also produce ceramic substrates found in liquid crystal displays, fiber-optic cables, automobiles, and laboratory products.

But, the company’s outlook is really moving the stock…

Moving forward, Corning’s ability to create thinner and larger glass panels will support demand for larger TVs and computer monitors.

Also, its market for high-end phones and tablet computers is growing rapidly, driving higher demand for Corning’s sophisticated glass products.

In fact, its diversity in this high tech era is what has option traders so excited.

Now, back to our monster trade.

This is an interesting one, there could only be two possibilities.

The first, a straight out call option speculation trade.  The cost, $3,400,000 with unlimited upside potential.

The second possibility is more reasonable. It’s a big institutional stock replacement trade.

Given the length of time and inexpensive price, it seems like a big institution came in selling their stock position and replacing it with options.

This will allow profits to keep coming in as long as GLW continues to rise in value.  It’ll also limit the trader’s risk to $0.40 a share over the next nine months.

What a clever idea!  And that’s probably why this trade continues today.

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Category: Unusual Options Trading Activity

About the Author ()

Marcus Haber is the co-editor of Options Trading Research and boasts well over a decade of real-life options experience. Learning from some of the biggest names in the business, Marcus has served as an Options Strategist for a number of firms and was also appointed to the Options Advsiory Board with Pershing, a branch of the Bank of New York.