EWA, VXX Options – Unusual Trading Activity – September 27, 2013

| September 26, 2013 | 0 Comments

Unusual Trading VolumeThis week we’re taking a look at unusual options trading activity in iShares MSCI Australia Index (EWA) and iPath S&P 500 VIX Short-Term Futures ETN (VXX).

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:

iShares MSCI Australia Index (EWA)

One trader is neutral to bullish on Australia’s stock market for the next two months.

EWA, a popular Australia stock tracking ETF, is currently trading for $25.80 per share. The share price is 18% above the 52-week low of $21.82 and 6% below the 52-week high of $27.50.

The trader sold 1,500 November 25 puts in EWA for $0.35. He or she will collect the full premium should the index close at 25 or above by November expiration.

EWA doesn’t typically have a lot of big options trades in its chain, so this 1,500 lot definitely qualifies as unusual activity. Someone certainly is confident Australia’s market is going to remain resilient for much of the remainder of the year.

iPath S&P 500 VIX Short-Term Futures ETN (VXX)

One strategist believes short-term volatility may climb into November, but still trade well below its historical average.

VXX, a popular short-term volatility ETN, is currently trading for $13.62. The shares are up just 1% from the 52-week low of $13.42 and are 65% below the 52-week high of $39.12.

This week, a trader sold 6,819 November 17.5 calls for $0.24 while also buying 2,273 November 14.5 calls for $0.67. The entire trade resulted in the trader collecting a small premium of just $0.05.

The trade, called a call ratio spread, is maximized if VXX closes at $17.50 on November expiration. The 3x short calls at the 17.5 strike means the trader doesn’t believe the shares will climb above that level anytime soon. However, he or she is expecting VXX to move higher from current levels to at least $14.50 or above.

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


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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.