DO, X Options – Unusual Trading Activity – December 1, 2014

| December 1, 2014 | 0 Comments

Unusual Trading VolumeThis week we’re taking a look at unusual options trading activity in Diamond Offshore Drilling (DO) and United States Steel (X).

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:

Diamond Offshore Drilling (DO)

Are offshore drillers going to halt their plunge? At least one trader thinks so.

DO, a large offshore driller, is currently trading for $29.30. The price is just under its previous 52-week low of $29.36 and is 48% below the 52-week high of $56.26.

A trader recently sold nearly 11,000 January 26.75 for $0.81. Given pervious open interest, this appears to be an opening trade. The trade will reach its maximum gain if DO closes above $26.75 on January expiration.

The price of crude oil has plunged, dropping below $65 per barrel for a brief time. That’s bad news for offshore drillers, who tend to have higher production costs. Given this DO trade, perhaps oil is nearing a bottom.

United States Steel (X)

American steel giant, US Steel, could be in for further downside this winter.

X is trading for $31.54, down 17% over the last month. The shares are 32% below the 52-week high of $46.49 and 41% above the 52-week low of $22.41.

This morning, traders purchased over 5,000 April 25 puts. The largest block traded for $1.30 and it was opening action.

This trade is one of two strategies. Either it’s an outright bearish bet, which could be the case if the economy slows down in 2015. Or, it could be a hedge against long stock (or long steel). Either way, these types of trades are worth keeping an eye on.

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

Tags: , , , , ,

Category: Unusual Options Trading Activity

About the Author ()

Gordon Lewis is the Chief Investment Strategist and editor for the popular daily newsletter – Options Trading Research. He’s also editor of our dynamic theme-based options trading service, Advanced Options Adviser, and one of the key analysts behind the highly successful Options Trading Wire.

Leave a Reply

Your email address will not be published. Required fields are marked *